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

Find a Credit Counseling Agency

In your credit counseling sessions, you and your credit counselor will design the best plan for you to meet your financial goals. It’s important that you find a good nonprofit credit counseling agency. One way of making sure you're hiring a good counseling agency is to make sure that they are a member of the National Foundation for Credit Counseling (NFCC). The NFCC is the oldest organization representing nonprofit credit counseling firms. To be a member of the NFCC, a credit counseling firm must meet strict standards.

As with any good or service, ask about the cost before becoming obligated to pay. Initial credit counseling sessions should always be free. It’s a good idea before your first session, to ask the counseling agency what you need to have available during the session. It’s common for you to need your bank account statements, credit card bills, other bills, and paycheck stubs. 

It’s a good idea to ask how the credit counseling firm compensates its counselors. This is important because you need to know if the counseling agency pays their counselors incentives or bonuses to steer you into particular debt relief options. If the credit counseling firm does pay their counselors in this way, the counselor may put their own financial interest above yours. Find another credit counseling company if this is the case.

Different counseling agencies do things in different ways. Some counseling agencies have sessions only by phone or via online meetings. Other credit counseling firms may only allow in-office meetings. It’s important to find what works best for you.

What to Expect at Credit Counseling

At your initial credit counseling session, you'll need paycheck stubs and bills. Or, you could bring a written schedule of income and expenses. You would also need a schedule of your credit card debts with minimum payments and interest rates available for each debt. You need a schedule of your other debts too. Your initial credit counseling session will take forty-five minutes to an hour. You aren't going to be talking to a customer service representative. You'll be talking to a trained and certified credit counselor. Your counselor will assess your income, expenses, and debts. Your credit counseling session will be completely confidential. By the end of your first credit counseling session, your counselor will recommend a plan of action custom-tailored to your financial situation. It's important to realize that credit counseling is sometimes referred to as financial counseling.

Making the Decision & Getting Started

Even when your counselor recommends a plan for you, give yourself a little time to consider the debt solution. It's a good idea to ask your counselor about the credit counseling agency's relationship with your particular creditors. Credit counseling organizations develop these relationships by negotiating with creditors for many different clients. Ask how successful the agency has been with these particular creditors.

Ask yourself how you feel about the budget necessary for a successful Missouri debt management plan. Can you stay on this budget? If not, you may want to see if the counselor can help you adjust your budget. If this doesn't work, you may want to consider other debt solutions. One other debt solution would be bankruptcy. Most bankruptcy attorneys offer free initial consultations for you to find out what bankruptcy can do for you.

Put Together Your Missouri Debt Management Plan

When negotiating with the credit card companies, your credit counselor will likely need copies of your credit card agreements. They need these agreements to know the terms for each card. They are trying to negotiate more favorable terms for you. Most people don't know where their credit card agreements are. These days, there is a simple way to get your credit card agreement. Use the Consumer Financial Protection Bureau's Credit Card Agreement Database.

Remember that there are no bad questions. If you don't understand something, ask your counselor. It's a good idea to see if the credit counseling agency will accept payments more often than monthly. For example, you may want to have a payment due on each of your paydays during the month. The due date might work best for you if it were on every other payday. Ask your counselor if you can do this. It may be a good idea for you to have the credit counseling company take an automatic payment on your due dates. Ask your counselor if they can do that.

Ask your counselor what to do about payments to creditors included in the Missouri debt management plan before the creditors accept the Missouri DMP. The problem is that making the payment could result in your paying the creditor twice for the same payment with one payment made by you and the other by the Missouri DMP. But, not making the payment could have a negative impact on your credit report. Your credit counselor knows your particular situation and will be able to make a recommendation on what to do about making the payments based on your unique situation.

Begin Payments

When you start making your Missouri debt management plan payments, make these payments on time if not early. The early months of your Missouri DMP is a good time to get in the habit of following your new budget.

Your counseling agency starts negotiating with your creditors after you have signed off on the debt management plan and started making your Missouri debt management plan payments. Stay in touch with your credit counselor to know what is going on. Check your monthly reports from the credit counseling firm to know who is being paid what. If you want to get updates about each creditor, talk to your credit counseling company. Now that the creditors have agreed to your Missouri DMP, your credit report has taken its worst hit. As you make your Missouri DMP monthly payments, your account balances drop, and your credit score rises. Sometimes your credit score is called your FICO score.

How to Stay Current with Your Missouri Debt Management Plan

It makes sense to track your expenses while you are in a Missouri debt management plan because you need to stay on budget. Not tracking your expenses is like driving a car without paying any attention to your speed. In a car, you have a speedometer to track your speed. What do you have to track your expenses? There are good online tools to track spending such as Mint.

It’s a good idea to reward yourself when you reach certain milestones in your Missouri debt management plan. For example, you could celebrate each time your total debt balance falls by a thousand dollars. These "rests" along the way will make it easier for you to maintain the discipline to get through the Missouri DMP. Imagine if you didn't rest between workdays. You would become much less productive. These little rewards are your rest stops as you move through your Missouri debt management plan. These rewards give you the "juice" to keep going. Make sure the cost of the rewards is small. The reward could be something like going out for dinner or a movie.

Make extra payments when you can. This will allow you to get ahead on your payments and have more breathing room should an emergency expense come up. If you do have an emergency expense that may impact your ability to make your debt management plan payment, contact your counselor immediately. Your counselor may know of a solution to your problem. Or, your counselor may be able to negotiate some extra time for you with your creditors.