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How to Become Debt Free with a Debt Management Plan in Connecticut

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In a Nutshell

The following is a summary of how to get started with your own Connecticut debt management plan. You’ll start by selecting a reputable credit counseling agency to work with and reviewing your options.

Written by Upsolve Team
Updated February 19, 2020

Whether you have hit a brick wall financially or you are concerned that your financial situation could soon become unmanageable due to mounting debt, a Connecticut debt management plan can help to stabilize your current financial situation and redirect you onto a path of becoming debt-free. A Connecticut debt management plan is a form of debt consolidation completed through a credit counseling agency. This process allows you to make one predetermined monthly payment to the administrator of your debt management plan; who uses the funds to pay off unsecured creditors. 

A Connecticut debt management plan is designed to allow you to gradually pay off your unsecured creditors over an extended period of time. Each month, you will make one monthly payment on the plan instead of paying each of your unsecured creditors individually. In most cases, your credit counseling agency will also be able to lower your interest rate and waive over-the-limit and late fees. You may benefit from a Connecticut debt management plan by no longer having to keep track of multiple payments, paying your debts off in full and being able to consolidate your debts even if you have bad credit and cannot qualify for a typical debt consolidation loan.

Is a Connecticut debt management plan the same as debt consolidation?

A Connecticut debt management plan is a form of debt consolidation. Debt consolidation involves combining all of your debt payments into one account with one single monthly payment. In order to set up a Connecticut debt management plan,, you’ll need to work with an accredited non-profit credit counseling organization.  Your credit counseling agency will help you consolidate your unsecured debts into one account with one monthly payment..

Most individuals who seek debt consolidation are attracted to the convenience of having one single monthly payment to pay on their consolidated accounts every month. This eliminates the need to keep track of paying multiple creditors each month and getting hit with high over-the-limit and late fees when they miss a payment. A Connecticut debt management plan makes it easy to pay all your unsecured creditors at one time. 

You can pursue debt consolidation without entering into a debt management plan, but some non-debt management plan forms of debt consolidation require good credit and/or a high credit score for approval. These forms of debt consolidation involve securing a new line of credit through personal loans, home equity lines of credit, a credit card balance transfer, or a mortgage refinance.

How to Become Debt Free with a Debt Management Plan in Connecticut

The following is a summary of how to get started with your own Connecticut debt management plan. You’ll start by selecting a reputable credit counseling agency to work with and reviewing your options.

Find a Credit Counseling Agency

In Connecticut, all debt management companies, or “debt negotiators” are required to be licensed and bonded. However, bona fide non-profit organizations are exempt from the licensing requirements. Note that you can check to see if complaints have been filed against any agency you’re interested in working with through the Connecticut Attorney General and Better Business Bureau.

Even if the credit counseling organization you are considering is licensed, you should still verify that it is also an accredited non-profit credit counseling agency. It is important to deal with a non-profit credit counseling agency because most credit card companies will only deal directly with non-profit credit counseling organizations. In addition, reputable non-profit credit counseling agencies do not charge for your initial credit counseling session. Non-profit credit counseling organizations emphasize consumer education over program enrollment and their credit counselors are not paid on commission. The National Foundation for Credit Counseling (NFCC) and the Council On Accreditation (COA) certify that their member agencies have agreed to abide by these industry standards. 

In the State of Connecticut, Money Management International, CESI, and GreenPath are all licensed to provide debt management credit counseling services. To find other credit counseling agencies in your area that are trusted by Upsolve, please feel free to contact us.

What to Expect at Credit Counseling

Many credit counseling sessions occur over-the-phone. This is normal and does not mean that the credit counseling agency is “screening” you. Offering credit counseling sessions over-the-phone and online, allows credit counseling agencies to offer credit counseling on-demand and in some instances, 24 hours a day. 

If your initial credit counseling session is conducted over-the-phone:

  • You’ll provide basic information from you regarding your personal finances and current financial situation;

  • You’ll be conversing with an actually certified credit counselor and not a customer service representative or screener;

  • If the session is automated, you will have the option of requesting a call from a certified credit counselor in-person at any point during the session;

  • Depending on your situation, the session will last 30 to 45 minutes;

  • The session will be confidential. Your creditors will not be notified of the credit counseling session or what was discussed;

  • You will receive personalized recommendations at the end of the session.

If you do not wish to conduct your initial credit counseling session online or over-the-phone, you can make an appointment to meet with a certified credit counselor in-person during normal business hours.

Making the Decision & Getting Started

Just as impulse purchases are something most people usually regret, making an impulsive decision to start a long term Connecticut DMP can also be something you come to regret. Even if you are feeling confident about your ability to start and complete a Connecticut DMP, you should not make up your mind about starting a debt management program until you have asked yourself some honest questions. These questions include:

  • Did you neglect to ask any questions? You should not be embarrassed or reluctant to ask questions about your DMP? Now is the time to ask any questions you may not have asked before.

  • Are you convinced you can stick to your budget? If you feel your budget is too strict you should tell your credit counselor now before starting your DMP.

  • Is a Connecticut DMP a good option for you? Having a long-term steady income is imperative to a successful DMP.  If you think your income may change in the near future, talk to your credit counselor about other debt relief options.

  • Have all the set-up fees, monthly maintenance fees and costs been disclosed and explained to you? If not, ask for them in writing.

Put Together Your Connecticut Debt Management Plan

If you have thought it out and had all your lingering questions answered, you are now ready to put together your customized debt management plan. In order to create your personalized plan with your credit counselor, you will need to provide them with some very specific documents. These documents will allow them to construct a personal profile of your current financial situation that they can present to your creditors to negotiate the best terms possible for your Connecticut debt management plan. As a result, it is important that you be able to document any financial detail they will share with your creditors.

It is very important that the plan is as accurate and as feasible as possible. In order to ensure this is the case, your credit counselor will need some very important documents from you. Some of the documents you should locate and copy to provide to your credit counselor include:

  • Your credit card bills detailing your current balance, minimum monthly payment, due dates, interest rates and late fees associated with your credit card accounts.

  • Your credit card agreements detailing the terms and conditions of your credit card accounts.

  • Your bank statement, or your credit union statement.

  • Your most recent credit report.

  • Your other monthly debts such as auto loans, payday loans, student loans, medical bills or personal loans.

  • Your other financial documents requested by your credit counselor.

Begin Payments

As part of your Connecticut DMP, you will make all your plan payments to the non-profit credit counseling agency you are working with. When you set up your Connecticut DMP, you will likely begin making payments before all of your creditors have agreed to the comprehensive terms of the plan. This is normal and you should still make the required payments on time and in the full amount called for in your plan. Your non-profit credit counseling agency will distribute the payments to your creditors as they sign on.

In addition to being informed about when your payments are due and how much you must pay, your non-profit credit counseling agency should give you a monthly statement detailing the payments it has received, the payments it has disbursed to your creditors and the balance owed on your plan. It should also reflect any interest rate reductions or over-the-limit and late fees that may have been waived.

How to Stay Current with Your Connecticut Debt Management Plan

If you’ve made the commitment to complete a Connecticut debt management plan and have started making payments, the last thing you want to do is get behind on your plan. As a result, one of the things you can do now is to make sure the due date for your payments does not fall on the first or last day of the month when large bills like your rent or mortgage payments are likely due.

Another step you can take to ensure you stay current with your Connecticut DMP is to set aside funds for unexpected emergencies. Many NFCC certified credit counseling agencies offer debt management plans that add a savings component to your plan. If this option is not available through your credit counseling agency, set up your own savings by putting unbudgeted income aside for emergencies when it comes in.

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Connecticut Debt Consolidation

The ins and outs of debt management plans generally hold true for Connecticut debt consolidation loans. Each is a form of debt consolidation and allows you to merge your accounts so that you’re only making one monthly payment on your combined debts. A significant difference, however, is that you generally must have a favorable credit score to secure debt consolidation loan. Moreover, unlike a debt management plan, non-profit credit counseling agencies cannot qualify you for a debt consolidation loan or advocate on your behalf with your creditors in obtaining one. 

Connecticut Debt Settlement

A riskier form of debt relief that may or may not be a good fit for your situation is Connecticut debt settlement. Debt settlement involves you or someone else negotiating with your creditors to accept less than they are owed (generally in the form of a single lump payment) to settle your debt. Unlike debt management plans, non-profit credit counseling agencies do not represent individuals in debt settlement negotiations. And for-profit companies that do offer this service often charge steep fees with no guarantee of success. Approach this option with caution. 

Connecticut Bankruptcy

Even though this option is generally only used as a last resort, a Connecticut bankruptcy remains a safe, legal form of debt relief available to anyone who can no longer pay their bills and is in the midst of a financial crisis. A Connecticut bankruptcy can help you get back on your feet when all else fails. Your non-profit credit counseling agency may be able to provide you with bankruptcy counseling upon request. For more bankruptcy help, contact Upsolve to learn more about how to file.

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