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

Find a Credit Counseling Agency

In the State of Delaware, all debt management companies are required to be licensed and bonded, including non-profit credit counseling agencies. You can download a list of licensed providers of debt management services in the State of Delaware from the website of the Delaware Attorney General.

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. Non-profit credit counseling agencies do not “market” debt management plans exclusively as a means of debt relief for all consumers. Instead, non-profit credit counseling agencies emphasize consumer education and debt relief programs tailored to your specific situation. In addition, reputable non-profit credit counseling agencies are certified by the Council On Accreditation (COA). This organization ensures that these agencies abide by industry standards of transparency and full disclosure of all fees and costs. 

Three national, accredited non-profit credit counseling agencies that offer free non-profit credit counseling free of charge are Money Management International, CESI, and GreenPath. All of which are licensed in the State of Delaware. Alternatively, to speak with a credit counselor at another non-profit we trust, contact Upsolve.

What to Expect at Credit Counseling

No matter which non-profit credit counseling agency you decide to work with, your initial credit counseling session should be a positive experience. If you are apprehensive about attending a session in person, know that most non-profit credit counseling agencies offer credit counseling over the phone, online or both. Regardless of how you conduct the session, it will begin with you providing some basic information about yourself and your current financial situation. Next, you and your counselor will discuss your financial challenges as well as your long term financial goals. Using the information you have provided, your credit counselor will recommend personalized money management and debt relief solutions for your consideration. 

Depending on your situation, the initial credit counseling session can last from 30 minutes to one hour. If you conduct the session in person, your credit counselor may also offer to pull your credit report and review your credit score and credit history with you. At the end of the session, in addition to your recommendation, you will likely be provided with free educational materials you can read to learn more about money management and personal finances.

Making the Decision & Getting Started

When you completed your initial credit counseling session, your credit counselor should have made it clear that you are under no obligation to enter into a debt management program with their agency. They should also have advised you about money management and debt management alternatives to a Delaware DMP, like a debt consolidation loan, debt settlement or bankruptcy.

If however, your credit counselor tried to pressure you to make a final decision at the end of the session, that is not a good sign regarding the credit counseling agency you choose. Good credit counseling agencies know that the decision to enter into a DMP is up to you and will not pressure you into making a specific choice you’re not comfortable with.

But even if you do feel good about the prospect of starting a Delaware DMP and believe you are capable of seeing it through, there are a few questions you should still consider before making a final decision:

• How do you feel about the budget you came up with? Do you think you can stick to it? 

• Are you and your family ready to make this commitment? If the plan fails because you miss a payment, you will likely be worse off than before due to the default interest rates kicking back in, and penalties and late fees being restored, etc.

• Are you aware of all the set-up fees and monthly fees or other costs associated with the debt management plan you are considering? If not, now is the time to ask. Also ask what fees, if any, can be waived.

• Have you considered all your options? Have you spoken to a bankruptcy attorney about whether bankruptcy might be a better alternative for you? 

Finally, ask yourself if you think you can manage your debt successfully without assistance. For some people, the financial education received through credit counseling is enough to help them work out their own long term repayment plan to pay off their debts.

Put Together Your Delaware Debt Management Plan

If you do decide to work with a non-profit credit counseling agency to enter into a debt management plan, your credit counseling agency will act as an intermediary between you and your creditors. This means that once you have put together your Delaware debt management plan, they will negotiate with your creditors, on your behalf, to obtain the best terms possible for your repayment plan. In order to do this, your credit counselor will need some very specific documents pertaining to your personal finances and your current financial situation. These documents will allow your counselor to better understand what kind of arrangement you’ll be able to sustain and will allow your counselor to assure your creditors that your DMP is likely to be successful. These documents may include:

• Your credit card statements.

• Your credit cardholder agreements.

• Your bank account statements.

• Your pay stubs or earnings statements.

• Your most recent credit report.

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

Begin Payments

Hopefully, when it is time for you to begin making payments on your Delaware DMP, you will be excited to start regaining control of your personal finances. But before you start making payments, you’ll want to keep a few things in mind.

First, make sure you know when your payment is due and the amount of each payment. It is also a good idea at this time to find out which creditors have accepted your Delaware DMP and which have not yet accepted its terms.

Second, resolve to make your payments on time, or early. The success of your Delaware DMP relies on making all of your scheduled payments on time. Missing even one payment, especially at the start of the debt management program, can make it difficult or impossible to get back on track.

How to Stay Current with Your Delaware Debt Management Plan

As important as it is to get off to a good start with your Delaware debt management plan, it is equally as important to stay current with your DMP. There are several things you can do before you make your first payment to make it more likely that you will stay current for the life of your plan. The first thing you can do is work with your credit counselor to ensure your plan payment is not due on the same day as other large monthly expenses like your rent or mortgage payment. This usually means avoiding due dates on the first or last day of the month.

In addition to this, you should also plan for emergencies or unexpected expenses that will arise over the life of the plan. One way of preparing for these types of expenses involves putting aside unbudgeted income you receive throughout the year from things such as overtime, end of the year bonuses or tax refunds. Finally, motivate yourself to stay current with your Delaware DMP by rewarding yourself as you reach new milestones, such as four straight on-time plan payments. Preparing for unexpected expenses and motivating yourself to remain on track will help to ensure that your payments get made on time.