Required Information for a Debt Management Program

Enrolling in a debt management program is a big step towards creating a sound financial future for yourself and your family. However, signing up for a program requires many things, the first of which is honesty. The debt management program can't help you unless you're honest with the credit counselor and, more importantly, honest with yourself.

Debt Management Program Basics

You've probably seen advertisements for debt management programs and credit counseling services on television and online. Debt management programs are tools offered by credit counselors to help you to get a better hold on your debt and, eventually, to eradicate that debt. Signing up for a debt management requires you to relinquish all of your credit cards and to enter a structured program to pay them off. However, you'll enjoy significant interest rate reductions, your creditors will automatically be paid on your behalf and you'll have a definitive end date for your program.

Outstanding Balances

One of the biggest barriers to getting out of debt is determining exactly how much you owe. This means you can't avoid looking at your balances when you get your statements each month. Debt management programs usually require you to put all of your cards on the program, so you won't be able to disguise the level of debt you're currently carrying. You also can't add to the debt by using your cards, so you can take solace in the fact that your debt number can only decrease.

Monthly Contributions

Life in a debt management program may seem easy, but it does require a significant financial commitment on your part. When you meet with your credit counselor, you'll receive an estimated figure for your required contributions to the program. This number usually falls somewhat in line with your current monthly payments, which is a huge benefit of the program. However, if you can't meet this number, you must be honest with your counselor and state your doubts. The program can only work for you if you're capable of doing your part, so it's in your best interest to speak up. It's likely that your counselor can work out a different arrangement with your creditors if you have no other alternative.

Financial Difficulty

After you settle into the program, you should have a monthly payment plan that aggressively attacks your debts, yet gives you enough money to have a life of your own. If something should come up that prevents you from meeting your financial obligations to the program, it's critical that you let your counseling agency know immediately. Many creditors will drop you from the debt management program if you miss even one payment, meaning that your interest rates will revert to their previous levels. However, if you're honest with your counselor and let them know when trouble arises, they may be able to help you maintain your active status in the program.