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

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In a Nutshell

The rest of this section will cover the different steps in a Nevada debt management plan. After this section, the rest of this guide will look at other debt-relief options besides DMPs.

Written by Attorney John Coble.  
Updated January 3, 2020


John C. Coble was born in Pennsylvania. He earned an Ivy League education before moving out west and becoming a wealthy cattle baron. In 1902, Coble’s friend and employee, the legendary hired gun Tom Horn, was tried for murder and executed. Coble had spent $100,000.00 on Horn’s legal defense. That’s almost $3,000,000.00 when adjusted for inflation to today’s dollars. In the years after Horn's execution, John C. Coble’s finances went from bad to worse. Coble was a poor man in 1914 when he was working on someone else’s ranch in Nevada. Shortly after midnight on December 4, 1914, John C. Coble walked into a bathroom at the Commercial Hotel & Casino in Elko, Nevada and shot himself in the mouth. These days, no one needs to go through the suffering that John C. Coble did. Today, we have good consumer protection laws and good debt relief options in Nevada.

Nevadans from all walks of life endure financial challenges every day. You may be a rancher who is suffering through trade wars or you may be any Nevadan suffering from the high cost of living. We have solutions that can put you on the road to good financial health.

A Nevada debt management plan (DMP) is a form of debt consolidation that doesn't use a loan. In a Nevada DMP, a nonprofit credit counseling agency negotiates a repayment plan with a lower interest rate with each of your lenders. You pay the credit counseling firm one lower monthly payment and the credit counseling company then pays the creditors. This monthly payment to the counseling agency is less than the combined minimum payments for your lenders.

This is Nevada. While many states have legalized gambling over the past twenty years to thirty years, Nevada is still by far the casino capital of the nation. Nevada has several times the number of casinos of any other state. It would be negligent if we didn't mention gambling as a risk for any debt solution. If you have a gambling problem, it would be a good idea to see an addiction counselor and resolve the gambling issue before seeing a credit counselor for your finances.

Is a DMP the Same as a Debt Consolidation?

Debt consolidations use loans to consolidate your debts. Debt consolidation loans can be personal loans, credit card balance transfers, or home equity lines of credit. Many of the benefits of a debt consolidation are the same as a Nevada debt management plan. A consolidation puts you on a repayment plan that will eliminate your included debts. These included debts will be unsecured debts like credit card debts and medical bills. Unlike a Nevada DMP, in a consolidation, you still have the old credit card accounts that you can use for new credit. It’s important to not use these cards. Using these cards will have a negative impact on your credit score since the new debt will increase your debt to available credit ratio. This ratio is one of the most important factors in determining your credit score. This will also cause you to have additional credit card payments to make. Note that your credit score is sometimes called your FICO score.

One risk associated with a consolidation is if the interest rate isn't lower than the loans you’re consolidating. If this is the case, you're in a worse position than before taking out your debt consolidation loan. Another risk with a consolidation is that if you default on the debt consolidation loan, a default interest rate could kick in and you would be in more financial difficulty than when you started the consolidation.

How to Become Debt Free With a DMP in Nevada

The rest of this section will cover the different steps in a Nevada debt management plan. After this section, the rest of this guide will look at other debt-relief options besides DMPs.


Find a Credit Counseling Agency

It’s important to make sure you hire a good credit counseling agency. Two factors to consider are whether the credit counseling firm is a nonprofit and is the credit counseling firm a member of the National Foundation for Credit Counseling (NFCC). The NFCC is the longest-serving nonprofit financial counseling organization in the country. The NFCC requires that its members meet the requirements of the Council on Accreditation (COA). The COA has strict standards for firms that it accredits. Another thing to look at is the counseling agency's Better Business Bureau rating. It isn't a good idea to hire a firm that has a low Better Business Bureau rating. If you want to be extra diligent, you could look at the Consumer Financial Protection Bureau's Consumer Complaint Database. This database doesn't give a lot of information and does cover the entire United States. Almost any company will have some complaints. The best way to use this database is to see how many complaints have occurred within the last couple of years. If there are only 2-3 complaints in the last couple of years, and it's a credit counseling firm that does business nationwide, there is a good chance that it’s still a good credit counseling company. Remember that no company is going to please everyone all the time.

Ask the credit counseling agency if they have some free promotional materials about their services. Most good counseling agencies have materials such as brochures because they want their clients to know about their services. Different credit counseling companies conduct their businesses in different ways. For example, some credit counselors only meet their clients by phone or online meetings. Other credit counseling companies may meet their clients by phone, online meeting, and in-person. Find the counseling agency that offers the options that are best for you.

What to Expect at Credit Counseling

At your first credit counseling session, bring your paycheck stubs, bank account statements, and your bills. It’s important that these bills you bring include the credit card bills and other bills you want to include in your Nevada debt management plan. Your credit counselor will use these documents to get a general overview of your financial situation. You will be meeting with a trained and certified credit counselor so play close attention. This person isn't a customer service agent. The counselor will assess your income, expenses, and debts. You and your counselor will set your short term and long term financial goals. At the end of your first credit counseling session, your counselor will recommend the best debt relief option for your specific situation. Your first credit counseling session is confidential. Your creditors are not involved at this point. They only become involved after you sign off on a debt solution and your counselor contacts them to negotiate a better deal for you.

Making the Decision & Getting Started

Ask your credit counseling agency a few questions before entering into a Nevada debt management plan. It's good to know how much the credit counseling firm's set-up fee and their monthly fee is. This part of your payments to the counseling agency doesn't decrease your debt balances. The credit counseling companies have to charge for these extra services to have money to pay their employees. While basic credit counseling is free, counseling agencies do charge for extra services like Nevada DMPs, foreclosure counseling, bankruptcy counseling, etc. Make sure that the fees you are being charged by your credit counseling firm are competitive with what other counseling agencies charge. Ask your counselor if the agency pays bonuses to its counselors for steering clients into particular plans. If the answer is yes, this is a bad sign. Such incentives will tempt the counselor to put their own financial interests above your financial interests.

Ask yourself how you feel about the budget that you will have to follow to have a successful Nevada DMP. Can you make the sacrifices necessary to meet this budget? This is an important question because if you fail in your debt management program, you will be in worse financial distress that before you started the DMP.

Put Together Your Nevada Debt Management Plan

With a Nevada debt management plan, making your payments on time is the most important part of the process. A close second most important factor is the fine-tuning you and your credit counselor perform before launching your Nevada DMP. It's important to go back through the details and make sure you didn't forget any expenses. Did you forget any debt that you should've included? Include all your credit card debts and medical bills. Make sure the due date for your debt management program payments is a good due date for you. That due date shouldn't be on a day that's a due date for one of your other large payments such as your car loan payment. Your DMP payment due date may work better for you if it’s more frequent than monthly. You may want your credit counseling firm to allow you a due date on each payday. It may be a good idea for the counseling agency to take an automatic payment from your checking account. Talk to your counselor about these things. Ask your counselor whether you should continue to make direct payments to your lenders until the DMP starts paying these lenders. Your counselor will be able to make a recommendation about whether to make these payments based on your financial situation.

Begin Payments

Once your Nevada debt management plan payments start, it's important to always make your payments on time if not early. Your credit score will decrease as you start your DMP but, the credit score will increase as you make your Nevada DMP payments. The decrease is because you have less available credit since the credit card companies close your accounts when the DMP starts. The increase in credit score is because you have more available credit as the total debt balance decreases. Many credit card companies put a notation that you are in a DMP on your credit report. This notation has little negative impact on your credit report.

How to Stay Current With Your Nevada Debt Management Plan

While in a Nevada debt management plan, it’s important to keep your credit counselor in the loop when it comes to changes in your monthly expenses or income. If these changes affect your ability to make your monthly payments on the Nevada DMP, your counselor may have ideas on how to keep you on track. It’s a good idea to track your expenses since it’s so crucial that you stay on budget while in a DMP. There are some good online personal finance tools to help you with expense tracking. Tools such as Mint not only have web-based tools but they also have apps for Android or IOS phones.

One best practice during your Nevada debt management plan is to set up a system to set aside money for expenses that don't occur monthly. An example of such an expense would be routine car maintenance like oil changes that you’re only paying for every few months. Another best practice is to set aside money for emergencies. You never know when you are going to have an unexpected veterinarian bill for your pet. You don't want such an expense to cause you to miss payments on your Nevada DMP. There are a few banking apps such as Chime and Acorns that will round up all your purchases to the nearest dollar and put the change into your savings.

Should you have an emergency and you don't have enough in savings to cover it, contact your counselor. The counselor has seen similar situations and may have ideas that you haven't thought of. Your counselor may also contact your creditors and negotiate for you to miss a payment or two.

Nevada Debt Consolidation

A Nevada debt consolidation uses a loan to pay off many of your unsecured debts. This is a good option if your credit score is high enough to get a loan that is large enough to pay off your other debts. To get a lower payment than the combined minimum payments on your old loans, you'll need to be able to get a lower interest rate on your debt consolidation loan. If you can’t get such a loan, a Nevada DMP is a better choice.

Nevada Debt Settlement

A Nevada debt settlement is when you settle each of your debts for less than the full amount. Since you aren’t paying the full amount, these settlements have a negative impact on your credit report. A debt settlement is a good option for only a few people. You need to have enough money to make large lump-sum payments to settle your debts, but at the same time, your credit needs to already be bad so that the damage to your credit will not matter.

Nevada Bankruptcy

A Nevada bankruptcy is an excellent solution if none of these other solutions will work for you. Contrary to the popular myth, most people only lose one thing when they file a bankruptcy: their debt. Debt is what you want to lose. For bankruptcies that do not need a lawyer, we provide a way for you to file your own bankruptcy. In cases that do need an attorney, we can help you find a qualified attorney in your area. 



Written By:

Attorney John Coble

LinkedIn

John Coble has practiced as both a CPA and an Attorney. John's legal specialties were tax law and bankruptcy law. Before starting his own firm, John worked for law offices, accounting firms, and one of America's largest banks. John handled almost 1,500 bankruptcy cases in the eig... read more about Attorney John Coble

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