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

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Written by Upsolve Team.  
Updated April 30, 2020

Summary

It can be difficult to get out of debt, but educating yourself on your options, like a debt management program, is the first step. Getting help from a professional agency to bundle your debts into a single, more manageable payment every month to pay off your debt is a good first step, and we’ll show you how that process works.

Nobody likes being in debt in the Sooner State, but there are ways to get back on an even keel. In Oklahoma, a debt management program (DMP) lets you work with a credit counseling agency to consolidate your debts into one payment a month that the agency will split between all your creditors until your total debt is paid off. A credit counselor with the credit counseling agency will work on your behalf to have your plan accepted by the creditors. The plans created usually center around lower interest rates and acceptable, lower minimum payments. When creditors accept your Oklahoma debt management plan, you may be able to live debt-free faster and with lower monthly payments than you thought possible. Debt management plans are also a way to consolidate debts for people who might not otherwise qualify for a debt consolidation loan  because of a low credit score. 

Debt management programs are a great tool, but not right for everyone. A DMP can only work with some types of unsecured debts like credit card debt and, in some cases, medical bills. If your debts are mostly payday loans or secured debt like auto loans, another solution is probably better for you. You’ll also probably see a negative impact on your credit score at first with a DMP. While this low score  may be stressful, if you keep making payments your credit score will most likely rise significantly well before you debt is paid. Practically speaking, you should consider whether you can live without your existing credit cards and no new credit until your debt is gone. Credit card companies close accounts when notified of your DMP. The plan also typically prohibits using any credit until repayment is complete. Even though you have a lot to think about, we’ll walk you through the process so you can make an informed decision that’s best for you.  

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

Even though debt management programs and debt consolidation seem the same, they’re not. Debt consolidation is what many debt relief options are called – including a debt management program – but other debt payments fall into that category which don’t involve a repayment plan. Most people using the consolidation term are referring to a specific type of solution known as a debt consolidation loan. A DMP is a form of debt consolidation that does not require a debt consolidation loan.

A debt management program uses a credit counseling agency as a go-between with your creditors. Unlike a consolidation loan, which is just another debt on your credit report, an Oklahoma DMP shows as a notation on your credit report, and once you begin a DMP all credit card companies will close your lines of credit. Debt consolidation loans aren’t without risk though. Defaulting on a secured loan, you may lose your home or car, and you’re still no closer to paying off debts you already can’t afford. Generally, only individuals who have good credit qualify for these types of loans. 

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

It can be difficult to get out of debt, but educating yourself on your options, like a debt management program, is the first step. Getting help from a professional agency to bundle your debts into a single, more manageable payment every month to pay off your debt is a good first step, and we’ll show you how that process works.


Find a Credit Counseling Agency

Before you create an Oklahoma debt management plan you need to find a trustworthy credit counseling agency. These agencies and their counselors must be licensed if they are operating in Oklahoma. You can choose between a for profit credit counseling agency, who charges consumers for its services, or a nonprofit credit counseling agency who relies on outside aid to help their clients. Both offer a variety of ways to help their clients – in person, on the phone, or online. Upsolve can help find a credit counselor in your area today.

Make sure you ask about fees and what happens if you can’t afford them, as well as how they are funded. You may want to ask how your counselor is compensated. Commission-based counselors may try to sell you more expensive services that aren’t right for you. The agency should also provide informational materials that answer FAQs for free if you ask. 

If the agency is nonprofit, ask if they are accredited – it means they are held to a professional standard of quality. 

  • The National Foundation for Credit Counseling (NFCC), the country’s largest nonprofit financial counseling organization, accredits agencies and only accepts members certified as having best practices. 

  • Beyond accreditation from a nonprofit organization like the NFCC, you can also check the Better Business Bureau to see if the company is in good standing. 

  • The Oklahoma Attorney General’s website should also have a history of complaints against the agency. 

The more informed you are, the better prepared you are to pick a good agency that advises you well and helps you put a good foot forward on your financial road to recovery.

What to Expect at Credit Counseling

Your initial credit counseling session isn’t something to worry about. You’re just going to have a talk with your credit counselor and go over your personal finances and talk about options that may work for you. The talk should take an hour or less. Before your session, getting together relevant documents before the meeting can help the conversation be much easier. If possible, bring:

  • Income information like paystubs or W2s, 

  • A list of your recurring expenses, 

  • A list of the total secured and unsecured debts you owe each creditor, 

  • The interest rates on those debts, and 

  • The minimum monthly payment owed to each creditor. 

Your credit report will contain a lot of helpful information and is easy to get. Your counselor should help you set financial goals and review debt relief options, like a debt management program, that may be right for you. The decision is yours, but you should get a lot of helpful information from your counselor to help you make it. 

Making the Decision & Getting Started

Now that you’ve talked to your credit counselor and it’s time to decide if an Oklahoma debt management plan is the best of the debt relief options available to you. You don’t have to make any decisions right away, and it’s a bad sign if your credit counselor pressures you to make a final decision at the end of your initial counseling session. Any attempt to push you into a particular decision is also worrisome. Asking questions is always helpful when making decisions. You’ll want to know if your credit counseling agency charges a set-up fee or monthly fees for your Oklahoma DMP and the amounts. It’s a good idea to ask what happens if you can’t pay those fees, as well. They are legal in Oklahoma, but usually initial set-up fees are no more than $75 and monthly fees no more than $50 a month. They’re built into your monthly payment.  

Take some time to think about yourself and your family, as well. You made a budget – will you be able to stick to it. Can you afford the payments? Will your family be able to manage on the budget as well? Decide if you can handle the long-term commitment. Remember that penalties and defaults could leave you financially even worse off if you cannot stick to the agreed-upon plan. 

Have you explored all your options? Other debt solutions may be better for some people. Bankruptcy may even be the best choice. If you have questions, Upsolve can help you to find an Oklahoma bankruptcy lawyer who can help answer them and figure out if it’s right for you. At the end of the day, though, it’s your choice. If you decide an Oklahoma DMP is right for you, it’s time to plan your financial future. 

Put Together Your Oklahoma Debt Management Plan

Your credit counselor will need a lot of detailed financial information from you to put together your Oklahoma debt management plan. They’ll likely ask for your bank account information, detailed information on your credit card accounts, and details on any other account you have open. Your cardholder agreements from your credit cards may be needed as well so your credit counselor has your specific account terms when talking to your creditor. These are documents credit card companies mailed to you when you opened your account that established the terms of your relationship with them. If you don’t have them anymore you can talk to your credit card company or get them from the Consumer Financial Protection Bureau’s Credit Cardholder Agreements Database

This is one of the more critical parts of the process, so be very thoughtful as you put the plan together – it will likely be part of your life for several years to come. Think about whether your due date and payment amount are realistic and sustainable. Was your budget complete and realistic or did you miss small expenses? It might be wise to follow your spending to see where your money is really going. Make sure you’re comfortable with the plan you’re creating. Your creditors will see it after it’s finished and you’ve begun payments, and once they agree to the plan it may be hard to change anything. If you’re comfortable moving forward, though, congratulations on taking a big step!

Begin Payments

You’ve done the hard work of thinking and planning, and now it’s time to take action and start paying off your debt. Your counselor should’ve given you the payment due date and monthly payment amount already, but if you’re unclear, reach out again. It’s critical you pay on time every month until you finish paying the debts. Pay early if possible, and if you come into some extra income think about making extra payments. After you agree to your plan and make payments, your creditors will be contacted by your credit counseling agency to secure their agreement of your Oklahoma DMP and the repayment plan. Creditors may take time to respond, but your credit counseling agency should’ve prepared you for this. You can always ask for updates along the way. 

How to Stay Current with Your Oklahoma Debt Management Plan

Now that you’ve assembled your Oklahoma debt management plan you have one big job out of the way. Your job for the rest of the process is to make on-time payments every month until your debt is gone. You did the work to make a budget, so you know how much you can spend and still make your payment. Use spreadsheets, budget software, whatever works for you, but stick with it. If you find you’re struggling to keep expenses down, track your spending for a few weeks to see if you have unexpected or frivolous expenses you didn’t include. If you have any changes to income or expenses, or have a financial emergency, let your credit counselor know as soon as possible (especially before you consider using a credit card for an emergency). Though it’s a lot to keep up with, don’t forget to celebrate the progress as your debt shrinks and you keep getting closer to living debt-free. 

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Oklahoma Debt Consolidation

When most people talk about debt consolidation, they’re really talking about a debt consolidation loan. Oklahoma debt consolidation does include Oklahoma DMPs, but more people recognize it as transferring all your credit card debt to a single card with a low interest rate or taking out a personal loan to pay all your other debts. If you’re considering debt consolidation, be aware not everyone qualifies for these loans. Debt consolidation loans are usually only approved for candidates with very good credit, so having a backup plan to deal with your debt may be a wise move.

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Oklahoma Debt Settlement

Oklahoma debt management plans lump your total debt from every creditor into one monthly payment so you can pay them off in full. On the other hand, for a debt settlement, a you or a debt settlement company you’re working with negotiates with your creditors to reach a lump-sum settlement on your debts for a fraction of what you still owe. You have a payment every month for both, but rather than it being passed to creditors by your debt settlement company, the payment in debt settlement is held in a fund until it’s large enough to offer your creditors a lump sum to dismiss your debts. Debt settlement can resolve your debts for less than you owe, but it’s a gamble. Creditors don’t have to settle. You’ll also have to  settle with each creditor individually. If you’re working with a debt settlement company, creditors likely aren’t being paid as your money grows in the settlement fund, so they can report your non-payment to credit bureaus, give the account to collection agencies, even sue. The risk can be great, but so can the reward.  

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Oklahoma Bankruptcy

Nobody likes to think about declaring bankruptcy, but in some situations it is the best choice to move past your current financial situation. An Oklahoma bankruptcy will discharge many debts. However, debts you owe for things like federal student loans and back taxes aren’t eligible. Filing bankruptcy will also allow you a break from the stress of collection calls and other harassing behavior creditors use to collect on your debt. It’s important to consider that even with all its upsides, bankruptcy has a significant, negative impact on your credit score. You’ll also have to be patient – it can take 10 years before it comes off your credit report - though rebuilding your credit score usually doesn’t take nearly that long. You can speak to an Oklahoma bankruptcy lawyer to see if this might be right for you – many offer free consultations. However, if you want to pursue bankruptcy and you’re worried about the expense, Upsolve may be able to help you handle bankruptcy without a lawyer.  

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