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How to Become Debt Free With a Debt Management Plan in South Carolina

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In a Nutshell

This section will focus on the steps to a successful South Carolina debt management plan. The rest of the article will focus on other debt-relief options should a South Carolina DMP not be the best debt solution for you.

Written by Lawyer John Coble
Updated January 3, 2020

In a time when 40% of Americans can't cover a $400 emergency expense, South Carolinians face special challenges that can harm their finances. The auto industry in the Upstate near Greenville and Spartanburg as well as the auto industry in the Low Country near Charleston face financial uncertainty from the trade wars. Farmers have crops that are rotting in the fields due to trade wars. To make matters worse, there is always the threat of more hurricanes like Hurricane Florence that caused over a half-billion dollars in damages in 2018. These problems are causing financial distress for South Carolinians from all walks of life. We have solutions to put you on the path to good financial health.

A South Carolina debt management plan uses a credit counseling agency to negotiate with your creditors and get more favorable terms on your debts. These new terms include lower interest rates. The credit counseling firm is able to get you a lower monthly payment than the combined payment of all your credit card payments and some other unsecured debts like medical bills. The South Carolina DMP allows you to make a single monthly payment. A DMP will eliminate your credit card debt and some medical bills when you make the last payment. Student loans, payday loans, and secured loans such as car loans don't work well in a debt management program. When you start a DMP, the credit card companies close your credit card accounts. This will decrease your available credit. Less available credit will have a negative impact on your credit report. You can't take out new credit card debt while in a debt management program. Your credit counselor may be able to negotiate an exception in case of an emergency.

A DMP is different from a debt settlement. In a settlement, you make large lump-sum payments to settle your debt for less than your total debt. In a DMP, you pay your debts in full through a repayment plan over a period of time.

Is a DMP the Same as a Debt Consolidation?

A debt consolidation is like a South Carolina debt management plan except that a debt consolidation uses a loan to combine your debts instead of a credit counseling agency. Debt consolidation loans can be credit card balance transfers, personal loans, or home equity lines of credit. There are some advantages to a debt consolidation compared to a South Carolina DMP. In a consolidation, you don't get a DMP notation on your credit report. In a consolidation, your old credit card accounts aren't closed. Debt consolidation loans are only available for you if you have a high enough credit score to get a favorable interest rate on a loan large enough to pay off your unsecured debts such as your credit card bills. Note that the terms credit score and FICO score are the same things.

How to Become Debt Free With a DMP in South Carolina

This section will focus on the steps to a successful South Carolina debt management plan. The rest of the article will focus on other debt-relief options should a South Carolina DMP not be the best debt solution for you.

Find a Credit Counseling Agency

It's important to find a good nonprofit credit counsel agency to handle a South Carolina debt management plan. It's important that the agency be a member of the National Foundation for Credit Counseling (NFCC). The NFCC requires that its members meet strict standards. You want to work with a nonprofit credit counseling agency that views credit counseling as a give and take of information between you and your counselor. You want to be with a credit counseling company that will use the information you provide them with and recommend the best course of action for you. Whatever the best course of action is for you, you want a credit counseling firm that will get the best deal for you. Don't be confused by the terms credit counseling and financial counseling - both mean the same thing. Do your research before deciding on a counseling agency. Check the Better Business Bureau rating for the credit counseling company. South Carolina has a good Department of Consumer Affairs website; you can search the Consumer Complaints Database and immediately see how many complaints a company has against it.

Different credit counseling firms have different ways of doing things. Some agencies may only offer credit counseling and DMPs. Other agencies may offer a full range of debt relief services including bankruptcy counseling, foreclosure counseling, and other solutions. To find out more about the credit counseling firm, ask if they have free promotional materials such as brochures. A good counseling organization will have such materials so you will know more about the services they offer.

What to Expect at Credit Counseling

Your initial credit counseling session will take about forty-five minutes to an hour. At your first credit counseling session, bring your paycheck stubs, credit card bills, other bills, and bank account statements. Your credit counselor will use these documents to get a general overview of your financial situation. Your credit counselor will be a trained and certified professional. Pay close attention to what your counselor says. Your creditors will not know about this initial session. The credit counseling sessions are confidential. Your creditors won't know that you are seeing a counselor until the counselor contacts the creditors to negotiate on your behalf.

Making the Decision & Getting Started

Don’t let anyone rush you into a South Carolina debt management plan. Even if your counselor recommends a South Carolina DMP, take time and think about it. Make sure you're comfortable with the decision. If your credit counseling agency pressures you into making a decision you're not comfortable with this is a sign that you're using the wrong credit counseling company.

Ask yourself a few questions. How do you feel about the budget required for the DMP? Can you stick with it? If you have a family, will your family be able to make the sacrifices necessary for a successful DMP? Have you considered other debt-relief options? You could take advantage of a free initial consultation with a bankruptcy attorney. It's a good idea to find out what the attorneys have to say. Bankruptcy could be a better option for you.


Put Together Your South Carolina Debt Management Plan

Your credit counselor will need more detailed information for your South Carolina DMP than they needed for the first session. Your counselor will need your bank account information and the credit card agreement for each of your credit card accounts. The counselor needs these agreements because they are seeking to put your debts on better terms such as lower interest rates. To get to better terms the counselor needs to know what the terms of the original agreement were. Those terms are in your credit card agreement. If you're like most people, you have lost or thrown away your credit card agreement. We now have an easy way to get these agreements. You can go to the Consumer Financial Protection Bureau's Credit Card Agreement Database to find your agreement.

If you are unclear about anything, ask your credit counselor before your South Carolina debt management plan starts. Make sure your payment schedule to the DMP works well for you. Can you make a payment with each payday? Can the counseling agency take automatic payments from your checking account on each payday? Discuss this with your counselor and see what works best for you. Should you continue to make the minimum payments to your creditors in the time between when you start making your South Carolina DMP payments and your creditors accept the DMP? The counseling agency will rely on their experience to make the best recommendation for what you should do in this situation based on your specific financial situation.

Begin Payments

The most important part of a South Carolina debt management plan is to make your payments on time. Take the early months of your DMP to get used to your new budget. Make sure all your expenses are being paid along with your South Carolina DMP payments. Make sure that you and your credit counselor are on the same page when it comes to your DMP payment due dates. When you've agreed to your DMP and started making payments to the credit counseling agency, the counseling agency will start negotiating with your creditors. Check with your counselor to get creditor by creditor updates on how the negotiations are going. Check your monthly reports from the credit counseling firm to see who's getting paid what. It's not only important that you keep your credit counseling company in the loop with your situation, but the credit counseling agency also needs to keep you in the loop about what they're doing for you.

How to Stay Current With Your South Carolina Debt Management Plan

It's a good idea to keep a close track of your budget. It's important to always do this but it's even more important while in a South Carolina debt management plan. There are some good online personal finance tools to help you keep track of your expenses. Mint is one of the best of these tools. All your expenses will not happen monthly. There are expenses that happen less often than monthly. Oil changes are one of these types of expenses. It's a best practice to set aside money each month to cover this type of expense. These expenses need to be in your budget.

While in a South Carolina DMP, it's good to reward yourself when you hit certain milestones. For example, every time you reduce the balances on your debts by a thousand dollars, take a special night out at a restaurant to celebrate but make sure you do not spend too much on these rewards. These rewards condition your mind to increase your chances of a successful debt management program.

If you have enough money set aside for your expected expenses that don't occur each month and you have emergency funds in your savings, make extra DMP payments when you can. Getting ahead on your South Carolina DMP will give you extra slack should an emergency arise. You can bet that sometime over the three to five years of your South Carolina debt management plan, an emergency will arise.

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South Carolina Debt Consolidation

A South Carolina debt consolidation is a good debt relief option if you still have a credit score that's high enough to get a low-interest loan that is large enough to pay off all your credit card debt. One of the advantages of using a debt consolidation loan is that you can still use your credit cards. This is good in emergency cases. But, this is bad if you continue to use the credit cards on a regular basis. Continuing to use these cards on a regular basis will hurt your credit and put you into more debt. Credit card debts are some of the worst types of debt due to high-interest rates.

South Carolina Debt Settlement

A South Carolina debt settlement is when you make a large lump sum payment to a creditor to settle your debt for less than the full balance. A debt settlement will hurt your credit since you're not paying your debts in full. Settlements are only a good choice for a few people. You need to have enough cash to make these large lump sum payments, but at the same time, your credit needs to be bad enough that another hit to your credit won't matter.

South Carolina Bankruptcy

 A South Carolina bankruptcy is a good solution when the other debt-relief options won't work for you. It’s true that bankruptcy will hurt your credit. It’s true that bankruptcy will stay on your credit report for ten years. It is also true that most people who file for bankruptcy have a higher credit score within two years after filing for bankruptcy than they had before filing for bankruptcy. In cases that do not need an attorney, we can help you to file bankruptcy yourself. In cases that do require an attorney, we can help you find a qualified attorney in your area. We're here to help you.

Written By:

Lawyer John Coble


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 Lawyer John Coble

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