How to Become Debt Free With a Debt Management Plan in Alaska

Find a Credit Counseling Agency

Unlike most states, Alaska does not regulate debt management service providers. As a result, it is even more important that you do your own research prior to starting a debt management program with any credit counseling organization.

First, even though Alaska does not regulate debt management service providers specifically, the Alaska Attorney General’s Consumer Protection Division investigates complaints filed against companies engaging in deceptive or misleading practices with the general public. You can contact the Consumer Protection Division and see if any complaints have been filed against the credit counseling organization you are considering working with.

Perhaps the best way to ensure you deal with a reputable credit counseling organization is by dealing exclusively with a certified, accredited non-profit credit counseling organization. Accredited non-profit credit counseling agencies have to abide by certain quality standards set by credit counseling organizations like the Council On Accreditation (COA) and the National Foundation of Credit Counseling (NFCC) that grant their accreditation. NFCC standards are established to ensure that the credit counseling agency deals with the public in an open, honest and professional manner. Foremost among these standards is that all non-profit credit counseling agencies that are accredited provide initial credit counseling free of charge. If you can’t find any accredited non-profit credit counseling agencies locally, there are several nationally accredited non-profit credit counseling agencies you can contact such as Money Management International, CESI or GreenPath. For additional help finding an accredited non-profit credit counseling agency in your area, feel free to contact Upsolve.

What to Expect at Credit Counseling

Your initial credit counseling session is your opportunity to share the details of your financial situation with your certified credit counselor. Your credit counselor will ask you about your finances, your income, and your debts. They will also help you put together a budget and offer to review your credit report and credit history with you. Finally, based on everything you discuss, they will make a recommendation about the debt relief options that are best for you. If you are uncomfortable doing your initial session in person, you can also do it over-the-phone or online. These will usually be self-guided and when you have entered all the requested information the session will end with a recommendation and information on how you can contact a credit counselor in person to get started.

Making the Decision & Getting Started

If you have made it this far and scheduled and completed your initial credit counseling, you’re probably convinced an Alaska debt management plan is a good fit for you. You are also probably anxious to get started. But before you get started, take time to ask yourself a few questions intended to ensure your success with whatever debt relief program you choose.

• Have you considered all your options? Even if you are looking forward to starting your Alaska DMP you should be sure you have looked into other options. For instance, if you get paid on commission or have irregular income then starting a long term Alaska DMP may not be a good option for you.

• Have all the set-up fees, monthly fees and other costs of the repayment plan been disclosed to you? If you do choose to go with an Alaska debt management plan there will usually be a set-up fee and monthly maintenance fee attached to the plan. Be sure these fees have been disclosed and explained to you beforehand.

• Do you have your necessary documents? You may not have brought any documents to your initial credit counseling session. And that is ok. However, in order to start your Alaska debt management plan, you will need to provide certain financial documents to your credit counseling agency. These may include credit card statements, cardholder agreements, pay stubs, and a recent credit report. We will discuss these in more detail in the next section on putting together your Alaska debt management plan.

Put Together Your Alaska Debt Management Plan

Your Alaska debt management plan will be a customized financial plan and schedule for helping you to become debt free. As a result, your credit counselor will need specific documents showing what debts you owe, how much you pay on those debts, who you are paying and how much you earn. Some of the documents you may need include:

• Credit card statements showing your current balances, minimum payments, due dates, penalties and fees owed on your credit card accounts;

• Your cardholder agreements disclosing the terms and conditions on all your credit card debt;

• Your bank accounts;

• You pay statements showing your monthly income and the frequency with which you get paid;

• Your credit report listing all of your current creditors and the status of your accounts;

• Information pertaining to other secured and unsecured debts you pay every month like payday loans, student loans, auto loans, medical bills or personal loans in order to complete your budget;

• Other information on your personal finances requested by your credit counselor to negotiate with your creditors.

Begin Payments

When it is time to begin making payments on your Alaska DMP, there are some best practices you can follow to make sure your DMP is a success. First, make all your payments on time. Making even one payment late can void the agreement and cause your creditors to back out. Make the full payment. It is also important that you make the full payment called for in your DMP every month. In addition to possibly voiding your plan, making less than the full payment can cause you to get behind to a point where you may not be able to get back on track. So always make the full payment. If a situation arises where you think you can’t make the full payment contact your credit counselor. They may be able to find room elsewhere in your budget to cover the unexpected expense. A final best practice is to know when your payments are due, how much the payment is, who to make each payment out to, where you can make your payments and what forms of payments are accepted. Waiting until the last minute to ask about one or more of these details can hold up a payment and cause it to be late.

How to Stay Current With Your Alaska Debt Management Plan

Just like we discussed some best practices for making sure your first payment is made on time and in full, there are some best practices you can follow to make sure you stay current with your Alaska debt management plan.

The first thing you can do is be proactive. Make sure you set the due date for your payments when no other large expenses, like your mortgage or car loan, are due. In general, this means always avoid setting it for the first or last day of the month. If your payment is due on an inconvenient date, tell your credit counselor as soon as possible and see if it can be changed. Another best practice for making sure you stay current with your Alaska DMP is to track monthly spending. If you get paid weekly and must put money aside to make large payments, track your weekly spending and make sure you are not spending too much. You can combine this with putting a set amount aside each week to make your DMP payment.

Finally, prepare for unexpected expenses or emergencies. Unexpected expenses include routine car repairs and seasonal increases in your utility bills. Emergency expenses include medical emergencies or weather-related damage. Put aside any unbudgeted income you receive to cover these types of expenses, so you do not have to tap into your DMP payment.