As you research your options for getting out of debt, you may run across the details of debt management plans and wonder, ‘Do debt management plans work?’ The answer is yes!
Debt management plans managed by a nonprofit financial education and credit counseling agency, such as Take Charge America, are a practical, manageable solution for consumers looking to pay off credit card debt.
Debt management plans work by:
- Reducing the amount of time it takes to pay off credit card debt
- Lowering the total amount of interest paid
- Allowing more of your monthly payment to go toward the principal
Most clients on debt management plans are able to pay off their enrolled credit card debt in five years or less.
Additional benefits of a debt management plan include:
- Consolidation of multiple monthly creditor payments into a single monthly payment, which may result in a lower monthly total
- The end of collection calls
- Waived late and over-limit fees
- A path to bring past-due accounts current
The first step in determining if a debt management plan is right for you is to go through a free credit counseling session. A certified credit counselor will work with you one-one-one to:
- Review your income, expenses and debts
- Create a workable budget
- Develop an action plan that may include debt management
If you and your counselor decide a debt management plan is the right solution for your financial situation, you’ll receive a debt management agreement outlining the terms of the plan. After you sign the agreement, you’ll start making one monthly payment to your debt management agency; they will then pay your creditors on your behalf.
As you work toward your goal of becoming debt free, you’ll also have access to ongoing financial education to help you learn effective money management skills.