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

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In a Nutshell

You can’t jump right into a debt management plan by simply “signing up.” It takes planning and a few steps to get a successful Kansas DMP off the ground: Keep reading to find out how to get started.

Written by Upsolve Team
Updated February 25, 2020

If you’re either worried about how much debt you’re trying to manage or you’re having trouble reaching your financial goals generally, there are a multitude of money management and debt relief solutions that you may be able to take advantage of. A Kansas debt management plan can take your overwhelming debt and make it more manageable. A debt management plan is a form of debt consolidation accomplished by working with a credit counseling agency. Essentially, you’ll identify which debts you’d like to consolidate and an agency will negotiate with your creditors. Once a plan is in place, you’ll make a single payment to the agency each month. The agency will then distribute that payment to your numerous creditors. 

Whether or not a debt management plan is a good option for you depends on a few factors. A Kansas DMP works best with unsecured debt, like credit card debt and/or medical bills. A Kansas DMP won’t work great for payday loans, auto loans, or other secured debt. You’ll also have to budget for one larger monthly payment versus multiple smaller debts, which can take some getting used to. 

Before you begin this process, know that a Kansas debt management plan is not the same as debt settlement. With debt settlement, you pay back only a portion of your debts. You may save on interest rates with a Kansas DMP, but you’ll be paying back those accounts in full. A Kansas DMP is a form of debt consolidation with the help of a credit counseling agency. 

Is a Debt Management Plan the Same as Debt Consolidation?

Debt consolidation is the process of combining debt into a single account. This account is then paid monthly with a lump sum, instead of paying multiple creditors individually. You can pursue this process by securing a debt consolidation loan to act as a balance transfer or by entering into a DMP. Examples of debt consolidation loans include credit card balance transfers, personal loans, and home equity lines of credit. By contrast, a Kansas debt management plan doesn’t require a new line of credit. Instead, this process uses a credit counseling agency as a middle man. The agency makes payments to creditors based on an agreed-upon plan. You would likely benefit more from debt consolidation through a loan or balance transfer if you have a good credit score. Good credit will secure you a lower interest rate on your debt consolidation loan so you won’t pay more than any of the individual lines of credit. If not, there’s generally no advantage to securing a new line of credit over entering into a debt management plan. 

No matter how you approach debt consolidation, make sure to do your research before committing to a plan of action. You don’t want to fall victim to a debt consolidation scammer that will take your money without paying off your debts. If you’re cautious and budget correctly, debt consolidation can be a great solution to debt-related financial challenges. It’s simply important to approach the process in a knowledgeable, intentioned way.

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

You can’t jump right into a debt management plan by simply “signing up.” It takes planning and a few steps to get a successful Kansas DMP off the ground: Keep reading to find out how to get started.

Find a Credit Counseling Agency

Before you even think about putting a plan together, make sure to do your homework. Look for a reputable credit counseling agency. As you search, be on the lookout for an accredited nonprofit organization that provides services in your area. Accredited nonprofit credit counseling agencies must abide by strict quality standards. Check with the NFCC or COA to see if a particular agency is accredited. The National Foundation for Credit Counseling (NFCC) is a long-running nonprofit financial organization that requires all member agencies to be certified. The Council on Accreditation is the relevant accrediting organization. You can also look to other resources as you investigate the reputation of credit counseling agencies. Check with the Kansas Attorney General or the Better Business Bureau to determine whether an organization you’re considering is reputable. 

Once you’ve narrowed down your choices, you can ask any given agency a few questions as well. Ask them for an idea of what costs, time, and requirements they have. The initial credit counseling session should be free, but the agency will likely charge an initial DMP setup fee and a monthly administration fee, should you choose to move forward with the debt management plan process. Get some brochures and other information that explains who they are and the services they offer. Lastly, find out how you will be interacting with your counselor. You may be more comfortable talking on the phone or you may want the convenience of accessing their services online.

What to Expect at Credit Counseling

At your free credit counseling session, you should have a few things handy for your counselor’s reference. Gather up all your credit card bills and medical bills. It’s helpful if the bills list the monthly minimum payments and your interest rates. Your counselor will want to know about all of your outstanding debts. Also, get a copy of your credit report for free for your counselor’s reference as well. Gather some of your recent paycheck stubs and a list of your regular monthly expenses. You’ll want to have a good understanding of your financial situation before you talk to a credit counselor. 

Know that the information you tell your credit counselor will be confidential. The initial session will last about 45 minutes to an hour. During that time, your credit counselor will assess your finances, income, and expenses. You will work with the counselor to set financial goals. You’ll then work out a plan to achieve those goals. Your creditors won’t be participating at this point. This is just a confidential session between you and the credit counselor. Before your session is over, the credit counseling agency will make personalized money management and debt management recommendations. You’ll be able to get a strong sense of whether your credit counselor thinks that entering into a DMP is a good idea for your unique financial situation.  

Making the Decision & Getting Started

You shouldn’t feel pressured to make a choice right away. Just because you are a good candidate for a debt management plan doesn’t mean that you shouldn’t think carefully about all of your options before committing to a plan of action. Be cautious of any counseling organization that pressures you into making a decision. Ask the counselor about the credit counseling agency’s relationship with your creditors. Since they act as a middle-man, you’ll want to make sure they have a good relationship. Lastly, determine whether you and your family can meet the obligations of a Kansas debt management plan. You’ll be making one large payment each month, which can mean an adjustment for your finances. Look at your budget and determine how easy it will be to stick to it. Understand that if you miss a payment, you could incur late fees or higher interest rates. Take a moment to explore other options as well. Find and talk to a bankruptcy attorney to determine whether filing for bankruptcy would be a better option in your situation. 

Put Together Your Kansas Debt Management Plan

Your credit counselor will need additional information once you’re ready to get your Kansas DMP process started. They’ll likely ask for your bank account information and detailed credit card account information. Some of that account information may include cardholder agreements. A credit card agreement includes the terms and conditions of each card. These agreements contain information like interest rates and late fees. You likely received copies of these in the mail when you opened the account. You can sometimes find copies on your account page of the credit card company’s website. If you don’t have them anymore, the CFPB has samples online

You and your counselor will also need to take time to fine-tune the details of your plan. Choose a due date that works when you’ll have the funds available to pay your account. Don’t schedule your repayment plan date around the time of other big monthly expenses. Go through bank statements to double-check that you don’t have any other recurring expenses that could affect your successful repayment of the plan. Work with your counselor to coordinate your plan payments with your pay frequency. Maybe a bi-weekly payment plan will work better if a monthly payment stretches you too thin. After you work out the details, the credit counseling agency will discuss the plan with your creditors. 

Begin Payments

Generally speaking, before you start making payments, the credit counseling agency will contact your creditors. They will establish a plan and agreement with each creditor. You can ask your credit counselor about how long it will take to work out the agreements. They have established relationships with many creditors, so they can explain how long this process is likely to take. 

At this point, you will have established a clear payment due date with your counselor. Reach out to them if you have any questions. Make each payment early if you can. Don’t wait until the last minute to pay. Take the first few weeks to get a feel for your budget and the process. Make sure your other monthly expenses are getting paid, too. Creditors will probably close some of your accounts as part of the Kansas debt management plan. As this happens, your credit scores may initially drop but don’t panic. Your credit score will start to improve once the balances on your total debt decrease. 

How to Stay Current with Your Kansas Debt Management Plan

After a few payments, you should have a good routine for managing expenses. Keep your credit counselor in the loop if you have any changes in your income or expenses. If you planned well, your Kansas DMP payment due date should be set for a time when you know you generally have funds available. Track your spending to make sure you don’t overspend. If you have occasional one-off expenses, make sure you have set aside money for them.  

Sometimes emergencies arise. Set aside a little extra each pay period to cover unexpected expenses. Let your credit counselor know if you’re struggling with any problems. As you pay your DMP, track your progress with your credit counseling agency. Ask your counselor about important milestones, and celebrate when you reach them. If you get a large tax refund or a holiday bonus, pay a little extra on your plan. Set some additional aside for a rainy day. If you’ve planned accordingly, you’ll usually have little trouble paying your Kansas debt management plan.

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Kansas Debt Consolidation

A debt management plan is a form of debt consolidation. Securing a new line of credit to act as a balance transfer is also a form of Kansas debt consolidation. If you have good credit, you may want to consider this form of debt consolidation, as you may be able to secure favorable loan terms that could save you money. Shop around for the best debt consolidation loans with lower interest rates before you commit. If you have real estate, you may want to look into refinancing your mortgage or securing a home equity loan. 

Kansas Debt Settlement

Debt settlement can be a viable tool to solve debt problems and save money for some individuals. Debt settlement works best when you have significant funds available to offer to your creditors in a lump sum in exchange for partial debt forgiveness. However, it’s important to note that since you’ll be paying less than you owe, debt settlement will temporarily hurt your credit. With that said, it may be a good option if your credit score is already low. Just make sure to research the reputation of debt settlement companies before you commit. Many are not trustworthy. Find one with a good reputation and has prior working relationships with your creditors.

Kansas Bankruptcy

Bankruptcy can also serve as a solution to debt problems. If the process of filing for bankruptcy is successful, you’ll eliminate your eligible unsecured debts. It’s a good idea to find and speak with a bankruptcy lawyer in your area if debts are overwhelming. Your credit counseling agency may even recommend bankruptcy as an option. Upsolve can help you file for free if you qualify for our assistance. Take the time to investigate your options as you work to become debt-free, as the right option for someone else may not necessarily be the right option for you and your family.

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