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

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In a Nutshell

Getting started with your own Delaware debt management plan is relatively easy. This process usually begins with a free, no-risk credit counseling session.

Written by Upsolve Team
Updated February 25, 2020

When you are dealing with a financial crisis, is important to understand that you are not alone. The fact is that others are struggling as well. Thankfully, numerous financial resources are available to Americans who are struggling to make ends meet while paying their debts. For example, a Delaware debt management plan can help you to get your finances back on track by consolidating your eligible unsecured debt. Thousands of others have benefited from debt management in Delaware and there are certified credit counseling professionals available to help you create your own Delaware debt management plan as well.

A Delaware debt management plan is a form of debt consolidation that combines your outstanding unsecured debt into a single account, which is then paid monthly. This option is available to you, regardless of your credit score. A Delaware debt management plan is especially beneficial for individuals who have a regular monthly income, as it is important to remain current with your repayment plan. By enrolling in a Delaware debt management plan now you can ease the fear of missing multiple debt payments every month, avoid over-the-limit and late fees associated with missed payments and put yourself on a clear trajectory to becoming debt free. In many instances, your credit counselor may even be able to negotiate lower interest rates on your consolidated debts and get over-the-limit and late fees waived.

Is a Delaware Debt Management Plan the Same as Debt Consolidation?

A Delaware debt management plan is a form of debt consolidation. Both debt management plans and debt consolidation loans combine several monthly debts into a single account, which is then paid monthly. Unlike a debt consolidation loan, a debt management plan does not require you to have a high credit score or obtain credit approval. In addition, a Delaware debt management plan can be set up by a non-profit credit counseling agency on your behalf. Oftentimes, they will also be able to obtain a lower interest rate on the consolidated debt, a lower monthly payment on the total debt and get over-the-limit and late fees waived. Other forms of debt consolidation require some type of credit approval and may or may not result in a lower interest rate or lower monthly payment than what you’re paying currently. 

Debt consolidation loan options include personal loans, refinancing your mortgage, home equity lines of credit and credit card balance transfers. None of these options are without their risks. A personal loan, the least risky option, is also the most difficult to get approved and the least likely to offer a lower interest rate and a lower monthly payment. Refinancing your mortgage or obtaining a home equity line of credit will usually result in a lower interest rate, however it requires securing unsecured debt with the equity from/in your home. Credit card balance transfers also require good credit, tend to offer risky promotional interest rates that increase at the end of the promotional period, and usually do not provide a high enough credit limit to consolidate all your secured and unsecured debts. As a result, many Americans prefer the debt management plan approach to debt consolidation. 

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

Getting started with your own Delaware debt management plan is relatively easy. This process usually begins with a free, no-risk credit counseling session.

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.

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Delaware Debt Consolidation 

A Delaware debt consolidation loan may make sense for you if you have good credit and have a home or other significant asset to secure the loan with. When personal loans are taken out for the purposes of debt consolidation, they do not necessarily feature with a lower rate of interest or a lower monthly payment like a debt management plan. These favorable terms, on the other hand, are typical of a mortgage refinance or home equity line of credit. Loan-based debt consolidation may also be a good idea for you if you want to consolidate types of debt that can’t be consolidated with a DMP.

Delaware Debt Settlement

Delaware debt settlement allows you access to partial debt-forgiveness from your creditors in exchange for a lump sum payment that closes out the accounts in question. Debt settlement may be a good option for you if you have a large sum of money to negotiate with and your debts are already delinquent by more than two months. Note however, that it can take a long time to get creditors to agree to settle your accounts for less than they are owed. Significant fees may be issued as you try to negotiate with your creditors. In addition, third-party debt settlement companies are not always “above board” businesses with the best interests of their clients at heart. Make sure you do your homework before committing to this debt relief option. 

Delaware Bankruptcy

If your debts have placed you past the point where a debt management plan would be of any benefit to you, then you might be a good candidate for a Delaware bankruptcy. Bankruptcy is a form of debt relief that protects you from your creditors and permanently eliminates your eligible debts. You can ask your non-profit credit counseling agency about obtaining bankruptcy counseling. You can also learn more about bankruptcy and how you can file your own bankruptcy from Upsolve. 

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