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Checklist for Those on Debt Management Plan

When faced with serious debt problems, people run to credit counseling agencies for help. True, there are many reputable non-profit organizations that offer credit counseling and help on financial management. However, there are also many organizations that pretend to offer credit counseling but charge their clients with unreasonably high fees for their services.

Author: Andrea Smith

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The Federal Trade Commission (FTC) warns the public against such credit counseling agencies that claim to be non-profit but asks for unreasonable payment from their clients who are already swamped in debt. Some of these fake credit counseling agencies use deceptive tactics on customers who do not have any idea that they’re dealing with the wrong credit counseling agency.

What is a Debt Management Plan?

For instance, some credit counselors may advice consumers to enroll into a debt management plan. With a Debt Management Plan, the consumer will be submitting a monthly payment to the credit counseling agency. The agency in turn, will divide the payment and distribute it to different creditors. It is true that creditors can give lower interest rates and even waive penalties for those who are paying through a debt management plan.

Where does your money go to?

The big question is: Is your credit counseling agency submitting your money to your creditors faithfully? Some fraudulent organizations have been proven to use consumers’ money on illegal purposes. Thus, before making any payment to your credit counseling organization, make sure that your creditors have agreed to accept your payment using a debt management agency. Also, it is crucial that you examine your monthly statement of accounts regularly so that you can be sure that your creditors are indeed receiving your payments promptly.

Timely Payments

Another important thing to consider is that you must submit your payments to the agency on time. In case you won’t be able to make it on the scheduled payment, inform your credit counseling agency right away. Keep in mind that creditors have given you privileges of waived fees and lower rates because you are enrolled in a Debt Management Plan. These privileges can be taken away if you miss another deadline of payment. Late payments will also be reflected on your credit report and because you’re trying to rebuild your credit, one late payment can ruin the progress that you’ve already started.

What if the credit counseling agency that handles your debts goes out of business?

Here are some actions that you must do without delay:

• If you’re paying automatically through your account, call your bank immediately and stop the payments.

• Inform your creditors that the credit counseling agency who manages your debts has shut down. Request if your creditors can still continue to give you lower rates even without a debt management plan.

• Submit your payments directly to your creditors.

• Check your credit report. Examine carefully if there was any late or missing payment while you were on the Debt Management Plan. If the delays in payments were due to the fact that your credit counseling agency is going out of business, call your creditors and inform them.

About Author

Andrea Smith is a writer and consultant with Consolidate4Free.com and has been providing consumers and business owners with free Debt Consolidation Advice since 1990. For years she has helped people with loan and credit problems especially pertaining to Debt Consolidation, Credit Card Debt Consolidation and Debt Negotiation. Copyright 2008.

Article Source: http://www.1888articles.com/author-andrea-smith-11174.html

Checklist for Those on Debt Management Plan