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

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Written by Upsolve Team.  
Updated February 25, 2020

Summary

You’ll need to take a few steps before you can benefit from entering into a Montana debt management plan. Consider the following information when determining whether entering into a DMP may be a good option for your circumstances.  

There’s help for those in Big Sky Country who are either struggling with debt or simply want to ensure that their debt load doesn’t spiral out of control. Debt solutions like a Montana debt management plan can help keep you afloat and on track to reach your financial goals. A Montana debt management plan (DMP) is a form of debt consolidation. With a Montana DMP, you work with a credit counseling agency to construct a plan. Once your plan is in place, the agency will administer that plan. Essentially, the agency of your choice will negotiate with your creditors and will combine your high-interest unsecured debts into a single account. Each month, you’ll make one payment to the agency, which will then distribute those funds to the creditors in your plan. 

The credit counseling agency will attempt to negotiate with your creditors to secure you a lower interest rate. As long as you pay on time every month, your credit score will improve as you pay your Montana DMP. A debt management plan works best if you mostly have credit card debt, medical bills and/or other high-interest unsecured debt. A Montana DMP doesn’t help much with payday loans, auto loans, and other secured debt. 

Note that debt settlement is not the same as a Montana debt management plan. Debt settlement only pays back a portion of your debts. A Montana DMP may reduce your interest rates, but you pay back those debts in full. A Montana DMP is a form of debt consolidation accomplished with the help of a credit counseling agency. 

Is a Debt Management Plan the Same as Debt Consolidation?

There are two primary forms of debt consolidation - debt management plans and securing a new line of credit to act as a balance transfer. In either case, unsecured debt will be combined into one account so that it can be paid off by one lump payment every month. Taking out a debt consolidation loan works best if you have a good credit score. 

With a Montana DMP, you use a credit counseling agency as the middle man to construct your combined debt account and to administer your plan. You pay the agency monthly and the agency makes payments to creditors based on the terms of the plan. It’s important to make your monthly payments on time once you’ve consolidated your debt. Missing payments could result in higher interest rates or late fees. If you used a home loan to consolidate, you put your property at risk by missing payments. However, if you’re successful at making your payments in a timely manner, debt consolidation can help you to achieve your financial goals in a methodical and reliable way. 

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

You’ll need to take a few steps before you can benefit from entering into a Montana debt management plan. Consider the following information when determining whether entering into a DMP may be a good option for your circumstances.  


Find a Credit Counseling Agency

The first step to determining whether a Montana debt management plan may be a good fit for your situation involves finding a credit counseling agency that will work for you. Make sure to look for an accredited nonprofit credit counseling agency that offers services in your area. Accredited nonprofit credit counseling agencies must abide by high quality standards. You can check to see whether an agency is accredited by visiting the websites for the NFCC and COA. The National Foundation for Credit Counseling (NFCC) is a non-profit financial organization that requires all member agencies to be certified. The COA is the industry’s accrediting organization. You should also check to see if the agency is reputable. Research the agency with Montana’s Office of Consumer Protection or the Better Business Bureau.

Know that your initial credit counseling session should be free. However, not all follow-up services are free. As a result, you’ll want to find out what about any fees the agency charges after that initial session. You should also find out what information the agency needs from you, how long the process takes, and where they are located.  Find out how their credit counselors are compensated. You shouldn’t be pressured into signing up because the counselor receives a bonus. The agency should provide you with some brochures or additional information if you ask. Lastly, find out if the agency has online access to view your accounts or has a phone number you can call if you have questions.

What to Expect at Credit Counseling

Your free credit counseling session will allow you to go over your finances and debts with your certified credit counselor. You’ll want to have a few things handy before you start so that your counselor can create an action plan that is truly personalized to your situation. Collect your credit card bills and medical bills. Find ones that list the monthly minimum payments and interest rates. If you can’t remember every debt, get a free copy of your credit report. You’ll also want to have some personal financial information handy. Gather a few of your paycheck stubs. Put together a list of your monthly expenses. Everything you discuss with the credit counselor will be confidential; your creditors won’t be notified. The session will last about an hour. During that time, your credit counselor will assess your finances, income, expenses, and debts. Together, you will set financial goals and you’ll create a plan to meet those goals. The credit counseling agency will then make some recommendations for your situation. One of those options may include a Montana debt management plan. 

Making the Decision & Getting Started

Take time to consider your options before committing to a debt relief plan. A credit counseling agency shouldn’t pressure you into making a decision. A debt management plan is a commitment, and you should be comfortable with your choice before moving forward. Look into the details of how your plan will unfold before you commit. Ask your counselor how much the Montana DMP set-up fee will cost. Find out about the credit counseling agency’s monthly fee. Verify that the agency has worked with your creditors before. Finally, determine whether you can commit to the obligations of a debt management program. A DMP monthly payment will be larger than each of the smaller bills you’re used to paying to your numerous creditors. That can take some getting used to. Review your budget and make sure you can afford this debt relief option. If you miss a payment, you could incur late fees or higher interest rates. 

Put Together Your Montana Debt Management Plan

If you ultimately decide to enter into a Montana debt management plan, you’ll need to provide your credit counselor with additional information about your finances. They’ll need your bank account information to withdraw payments. Additionally, you’ll have to provide more details about your debt-related accounts. They may ask to see your cardholder agreements. These agreements include important terms and conditions related to your credit card accounts. Your credit counselor will be interested in the interest rates and late fees for your cards. You can often access the agreements through your credit card company’s online account portal. You also should have gotten copies in the mail with your card. You can view samples online through the CFPB

Before you start payments, you’ll work on the details of your plan. This process often starts with choosing your due date. Pick a time of the month that works for you. Make sure no other large expenses come due around the same time. Review your bank statements to double-check that you don’t have any other recurring expenses that could affect your repayment of the plan. Look at your pay schedule and make sure you’ll have funds available then. Coordinate your plan payments with your pay frequency. If you can’t swing a monthly payment, ask your counselor if you can do a bi-weekly payment plan. Get details about the credit counseling agency’s monthly fee. Ask the credit counselor when your creditors will be paid. If your plan doesn’t pay creditors right away, you may want to keep paying them directly until it does to avoid a negative impact on your credit score. Ask your counselor what payment approach would be best in your situation as creditor negotiations are pending. 

Begin Payments

Make sure you’ve calendared your due date and double-checked the details with your counselor. Contact them if you have any questions. Make each payment on time or early. Take the first few weeks to implement your budget and track your spending. Review your recurring monthly expenses and make sure they’re getting paid, too. If your finances are well-managed, keeping your DMP current will be easier than this process might be otherwise. 

Your credit counseling agency will contact your creditors and work out an agreement with each of them. They have established relationships with creditors and will pay them directly. Your credit counselor should be able to give you an estimate of how long this process will take. Ask your credit counseling agency for updates as they move forward with creditor negotiations. 

How to Stay Current with Your Montana Debt Management Plan

If you’ve done a good job planning, you generally shouldn’t have trouble making your monthly payments. However, unexpected changes to your circumstances may occur. Keep your credit counselor informed about any major changes to your income or expenses. You should have set your Montana DMP payment for a time of the month that you’ll generally have sufficient funds available. If you need to change this due date at any point, contact your counselor. 

You’ll also want to track your spending with online budget tools or a simple spreadsheet. Occasionally review your financial situation to make sure you are on track. Review the monthly reports from the credit counseling agency. Take a moment to celebrate when you reach certain milestones. If you can, make extra payments. Set some money aside each month for the occasional one-off or emergency expense. If you have any problems, communicate them with your credit counselor. 

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Montana Debt Consolidation

Debt consolidation accomplished through securing a loan (that then serves as a balance transfer) is an alternative debt consolidation option. Debt consolidation loans work best if you have a good credit score. With a good credit score, you’re more likely to get favorable debt consolidation loan terms that could save you money. Shop around for the best debt consolidation loans with low interest rates. Like a debt management plan, a debt consolidation loan transforms your pile of unsecured debts into one debt-related account, to be paid monthly. 

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Montana Debt Settlement

Unlike a debt management plan, a debt settlement process pays back only a portion of the debts you owe. Debt settlement is most effective when you have significant funds available to offer to your creditors. Note that your credit will take a hit if you don’t pay your debts in full, which is the primary reason why debt settlement should only be considered if your credit score is already low. Research debt settlement companies before you commit to this process, as many debt settlement companies are fronts for scams. However, if you can get reputable help, debt settlement could save you some money and free you from overwhelming debt.

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Montana Bankruptcy

Bankruptcy may also serve as a viable solution to your debt-related challenges. A successful bankruptcy eliminates most of your unsecured debts. If your debt is overwhelming, find and speak with a bankruptcy lawyer in your area to determine whether you’d be a good candidate for bankruptcy. Note also that Upsolve helps qualifying individuals file for free. Take the time to consider all of your options as you work to build a solid financial future.

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