How to Become Debt Free With a Debt Management Plan in New York

Find a Credit Counseling Agency

Before you create a New York debt management plan, you’ll need to find a trustworthy nonprofit, accredited credit counseling agency. These agencies and their counselors must be licensed if they are operating in New York.  You can schedule a free credit counseling session with a nonprofit agency and the agency should give you free informational materials that answer FAQs upon request. You can also get details on how you’ll meet, initial set-up fees, monthly management fees, what happens if you can’t afford fees, and how counselors are paid – commission-based counselors may try to sell you pricier services for their benefit. 

When researching a credit counseling agency, there are a few ways to check their professional reputation. 

• The Better Business Bureau can tell you if the company is in good standing. 

• The New York Attorney General’s website will list any complaints filed against the agency, 

• Make sure that any nonprofit credit counseling agency you may want to work with is accredited by the NFCC (National Foundation for Credit Counseling), the largest nonprofit financial counseling organization in the country. The NFCC only accepts members who are certified by the COA as employing best professional practices. 

Make sure you do your research before making your final decision, as you’ll want to work with a reputable nonprofit. Find another agency if you aren’t comfortable at any point.

What to Expect at Credit Counseling

New York budget planners can advise you on a variety of topics like student loans, personal finance, bankruptcy, consumer credit, and debt management programs – including creating a New York debt management plan. The basic idea is to discuss your financial situation and create a manageable repayment plan. After your free session offered by a credit counseling agency, you should leave with an action plan that works for YOU.

Finding a few documents before your initial session will make the conversation go more smoothly. You’ll want information regarding your:

• Income (paystubs, gains in investment accounts), 

• Expenses (utility and mortgage bills, cell phone bills, loan payments), and 

• Debts (credit card bills, medical bills, loan balance statements). 

Create a list of secured and unsecured debts you owe to each creditor, interest rates on each of those debts, and the minimum payment each creditor requires. Your credit report has a lot of debt information that can be very helpful to you and your counselor. Though your counselor can make recommendations about debt solutions, you make the final decision. You don’t have to decide immediately; it’s a bad sign if your planner pressures you to commit when the counseling session ends or steers you towards a specific option. However, if your counselor says you’re a good candidate for a New York DMP, it may be a solid option for you.

Making the Decision & Getting Started

Before you make a final decision about entering into a New York DMP, ask any questions you may have. When it comes to fees, does the agency charge an initial set-up fee or a monthly fee to administer your plan? If so, how much? It’s legal in New York to charge these fees. Initial set-up fees usually are not more than $75, and monthly management usually costs no more than $50. These fees are built into your monthly payment. Ask if your agency has a good working relationship with any of your creditors. Having a well-established relationship can make dealing with creditors much easier.  

Take some time to consider if the plan is realistic and you can afford the payments.  If you break from your New York DMP, the penalties and default interest rates that will follow could leave you worse off financially than before you began. Remember to consider all your options, too. Not every solution fits every person. Sometimes, bankruptcy is the best choice for a fresh start. If you have questions about bankruptcy, Upsolve can help you find a New York bankruptcy lawyer to learn if this option might be best for you.

Put Together Your New York Debt Management Plan

Your credit counselor will ask you to provide detailed financial information in order to make your New York debt management plan as realistic and comprehensive as possible. The information that your credit counselor will need is more comprehensive than the financial information that you probably brought to your initial counseling session. You will probably be asked to provide:

• Bank account information, 

• Detailed credit card information, 

• Current loan statements, and 

• Cardholder agreements from your credit cards, which you can get from your credit card company if you don’t have the copy that was mailed to you when you opened the card. 

Go back over the terms of your New York DMP. Can you manage the due date and payment amount each month? Did you decide to create a budget? Did you forget to put expenses on your budget, however small? Can you keep to your budget? If there are any nagging questions or any details worry you, speak up now. Once your final plan is sent to creditors and they accept it, you’ll be locked into those terms for the duration of your repayment.

Begin Payments

Now that you’ve done the hard work of creating a New York debt management plan, it’s time to start making your monthly payments. Your credit counselor should have confirmed your  payment due date and monthly payment amount when you finalized the paperwork to enter into your DMP. Set a reminder or put the date on your calendar – it’s critical you make these payments on time each month. If you can, pay early and consider making extra payments. Your counseling agency will contact your creditors to confirm acceptance of your New York DMP after you begin paying. 

How to Stay Current with Your New York Debt Management Plan

Your debt management program is producing results – you have a plan and your creditors have accepted it. Making timely payments is now your primary responsibility. You and your credit counselor examined your finances and put together a plan that works with your budget. Stay on budget, track your spending to avoid needless expenses through a spreadsheet, budget software, or whatever method works for you.