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

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Written by Upsolve Team.  
Updated April 27, 2020

Summary

Nobody gets out of debt overnight, but if you explore your options and decide that a Nebraska DMP is the best choice to fix your finances, then one will be made available to you. You’ll work with a credit counseling agency to evaluate your personal finances, come up with a manageable plan, and work with creditors so you can have more control over your financial future.

If you find yourself in a tough financial situation and you’re unsure of how to navigate it, working with a credit counseling agency can help you work towards becoming debt-free. Depending on your financial circumstances, you may benefit from taking advantage of a debt management plan (DMP). In a Nebraska DMP, you and a credit counseling agency will work together to consolidate your unsecured debt. Once the plan is in place, you’ll be placed on a fixed, monthly payment plan that will allow you to make a single payment to the agency instead of multiple payments to multiple creditors. The agency will distribute your monthly payment to your creditors until your total amount owed is paid off. 

The credit counseling agency, through your assigned credit counselor at the agency, will try to negotiate a plan with your creditors. These efforts are usually centered on securing favorable interest rates and lower minimum payments. The goal is getting your creditors to agree to the terms of your Nebraska debt management plan. Debt management plans are particularly advantageous for people who don’t qualify for other debt relief options because their credit scores are low. DMPs are available to everyone.

With that said, just because there are a lot of upsides to Nebraska’s debt management programs doesn’t mean that a DMP is the right option for everyone. The program only handles certain unsecured debts – credit card debt, personal loans, and in some cases medical bills; so they’re not the best answer for payday loans and secured debts like car loans. Also, you need to consider that you probably won’t be eligible for new credit while paying your Nebraska debt management plan, and credit card companies will close your accounts when the plan begins. That means it’s important to plan ahead. You should also make sure you can keep current on your repayment plan. Failing with the repayment plan can result in late fees and penalties. There is a lot to think about, but don’t worry! You don’t have to make a choice right away, and you can seek professional guidance regarding your options in the meantime. 

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

It’s understandable to think a Nebraska DMP and debt consolidation are the same – you’d be half right, if this was your assumption. The umbrella of “debt consolidation” includes DMPs, where a credit counseling agency acts as middle-man between you and your creditors. It also includes the process of taking out a new line of credit to pay off existing debts. New lines of credit include credit card consolidation loans, personal loans, mortgage refinancing, and home equity lines of credit that have lower interest rates than the high interest debt that is consolidated using this method. 

Unlike DMPs, debt consolidation loans allow you to avoid closing your credit card accounts. Also, this can be a good option for people with high credit scores who can qualify for these loans at favorable rates because they don’t have to work with a “middle man” on an ongoing basis. Debt consolidation loans can, however, be risky. Any secured loan you default on can cause you to lose your house or car. Though there is a lot to think about, debt consolidation is a great option for many people and can provide a quick way to consolidate many bills into one account.

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

Nobody gets out of debt overnight, but if you explore your options and decide that a Nebraska DMP is the best choice to fix your finances, then one will be made available to you. You’ll work with a credit counseling agency to evaluate your personal finances, come up with a manageable plan, and work with creditors so you can have more control over your financial future.


Find a Credit Counseling Agency

When developing a Nebraska debt management plan, finding a trustworthy credit counseling agency is the first step you’ll want to take. In Nebraska, people and agencies offering debt management services must be licensed by the state. A nonprofit credit counseling agency that is accredited is your best bet, as these agencies are held to particularly high standards within the industry. Many agencies offer services options in person, online, and by telephone. The National Foundation for Credit Counseling (NFCC), the country’s largest nonprofit financial counseling organization, only accepts certified agencies as members, so their member database is a good place to research reputable agencies near where you live. To learn more about a specific agency’s reputation, you can check the Nebraska Attorney General’s website for any complaints against the agency or the Better Business Bureau’s website. When in doubt, more information is always better. Upsolve can help you search here if you’re interested in connecting with a licensed credit counselor in your area. 

Make sure you ask questions about fees and your credit counselor’s compensation before you sign up to have them administer your DMP – sometimes counselors paid on commission may try to offer you more expensive services that may not be right for you. By contrast, if you’re offered services from a counselor who doesn’t work on commission, you’ll know that the recommendation isn’t tied to a personal financial stake in your decision making. 

What to Expect at Credit Counseling

Don’t stress when preparing for your initial counseling session. It’s just an in person or telephone conversation with a credit counselor at the credit counseling agency that should last less than an hour. This service is free and you can sign up for this meeting regardless of whether you ultimately decide to move forward with a DMP. At the meeting, your credit counselor will go over your finances as well as debt management options that may work for your situation.

Gathering documents before the meeting can help the counselor help you make a personalized action plan tailored to your specific goals and circumstances. Not only do you want income and expense information, ideally, you’ll have a list of the total secured and unsecured debts you owe each creditor, interest rates, and the minimum monthly payments available to show your counselor during your meeting. You can find a lot of this on your credit report. This is a no-risk, no-obligation, and no-cost service. If you work with an accredited, nonprofit organization, their advice will be solid. But choosing whether to take that advice or go another way is entirely up to you.

Making the Decision & Getting Started

Before you decide to move forward with a Nebraska DMP, ask questions. Are there set-up fees or monthly fees for your debt management plan? If so, how much? Fees are permitted in Nebraska and are usually nominal and built into the monthly payment. Find out about the relationship your credit counseling agency has with your creditors – good relationships can make creditor agreement more likely. Whatever answers you get, remember that you don’t have to make a decision right away; it’s not a good sign if your credit counselor pressures you to decide or keeps pushing a specific choice.

You should also think long and hard about your own feelings. Can you stick to a budget and afford the payments? Can you commit to payments for the long-term? If not, with penalties and defaults you could be financially worse off than you began. Have you explored all options? For some people, other debt solutions are a better fit. Bankruptcy may even be the best choice for some. If you have questions about bankruptcy, Upsolve can help you find a Nebraska bankruptcy lawyer who may be able to inform your decision. Ultimately, the decision is yours. Now, the work begins...

Put Together Your Nebraska Debt Management Plan

Your credit counselor will need a lot of very personal financial information to accurately construct your Nebraska debt management plan. This information is much more specific than anything you previously provided – bank account information, detailed credit card information, and statements from both. Sometimes you’ll need to provide cardholder agreements from your credit card companies to make sure your counselor has all your specific account terms when speaking to your creditors. Many companies mail them to cardholders annually and you received one initially when you opened your account. 

Once a proposed plan has been created, look at the due date and payment amount carefully to make sure they work for you. Look over your budget again to make sure you’ve included all expenses and can stick to the payment plan that has been created. If any details bother you, now is the time to speak up. If you have questions about when creditors will get paid, your total monthly DMP fees, or alternate pay schedules, ask now. If your creditors accept the terms, you’re locked in – so be sure you like what you’re credit counselor has done on your behalf before your plan enters its repayment phase. 

Begin Payments

It’s time to start paying off your debt. You should have received your payment due date and the monthly payment amount from your credit counselor, and it’s critical you follow these guidelines. Pay on time. Pay every month. Pay early if possible. That’s your job for the rest of the process. After you start paying, your credit counseling agency will begin contacting creditors and working to get their acceptance of your debt management plan. Your counselor should have outlined an estimated timeline for the result of this process so you’re not waiting by the phone, but you can always contact them and ask for progress updates. 

How to Stay Current with Your Nebraska Debt Management Plan

Pat yourself on the back, because you’ve accomplished a lot already and gotten your Nebraska debt management plan in place.  Now you need to stay the course and make your payments on time every month. You should’ve examined your finances with your credit counselor during your counseling sessions as they assessed the best debt management options for your situation. Keep tracking your spending and try to stay on budget however you can – spreadsheets, budget apps, whatever works for you. Keep frivolous spending to a minimum and set aside a system for rainy day funds. Emergencies and unexpected expenses do arise. If you must use a credit card for emergencies, talk to your credit counselor if you’re concerned about making your DMP payments. Ideally, set aside emergency funds in your budget so that your repayment schedule isn’t compromised when these challenges arise. Also, make sure you find a way to celebrate when you make significant progress on your debts. Celebrating milestones will help to keep you motivated to see your DMP through to the end. 

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Nebraska Debt Consolidation

A Nebraska DMP is a form of debt consolidation. Debt consolidation is a broad umbrella of options that can take many forms. DMPs don’t require you to take on new lines of credit to streamline your debt. However, debt consolidation loans do just that. Assuming a debt consolidation loan can involve taking out credit with lower interest rates to pay off all your other debts via a single account or transferring all your outstanding credit card debt to one card so you’re down to one credit card payment per month. Though this option can sound tempting, note that Nebraska debt consolidation loans are often available only if you have good credit. 

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Nebraska Debt Settlement

While a Nebraska debt management plan consolidates payments so you can fully pay your debts in a streamlined fashion, debt settlement attempts to negotiate a lump-sum figure creditors will accept to forgive your debt for less than you owe. Your monthly DMP payment passes from your agency to your creditors, but your payment for a Nebraska debt settlement is made either directly to a creditor or to a debt settlement company. Because you’re only paying a fraction of your debt in exchange for partial loan forgiveness, this option will cause your credit to take a direct hit initially. 

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Nebraska Bankruptcy

If alternative debt management and debt relief solutions aren’t a good fit for your situation, filing for a Nebraska bankruptcy may be the best option for you at this time. Bankruptcy, depending on your situation, may allow you to discharge some or all debt. However, not all debts – federal student loans and tax debts, for example – are eligible for elimination through the bankruptcy process. Speaking with a Nebraska bankruptcy lawyer can help you decide if this option is right for you. Most bankruptcy lawyers offer a free initial consultation. However, if you’re worried about the expense of working with an attorney, Upsolve can help you file your bankruptcy case for free.

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