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

Upsolve is a nonprofit tool that helps you file bankruptcy for free. Think TurboTax for bankruptcy. We also provide free education, customer support, and a private community. Over 2 million web visitors since 2018. We never ask for a credit card. Funded by generous donors like Harvard University and featured 4x in Forbes. Explore Tool Now


In a Nutshell

Getting out of debt isn’t easy, but the right information can help you make good choices along the way: Washington DMP provides an opportunity to repay your debts in a streamlined fashion. Read on to learn how working with a credit counseling agency to develop a realistic, consolidated repayment plan with your creditors can put you on the path to financial freedom. 

Written by Upsolve Team.  
Updated April 27, 2020


Once you get in debt, it is very hard to get out of it. However, there are resources available to help you in your quest to become debt-free. For example, you can take advantage of a Washington debt management program. You'll be working with a  credit counselor at a nonprofit credit counseling agency to create a plan for combining your unsecured debt to make it more manageable. Essentially, the agency will contact your creditors to negotiate lower interest rates and a lower monthly payment amount. Once the plan is accepted by your creditors, the administrator for your Washington debt management plan will collect your payment every month and distribute it among your creditors until your debts are paid. You will have no late fees or penalties to worry about if you stay current with your one DMP payment and this streamlined approach will allow you to avoid having to juggle multiple accounts with multiple creditors. Finally, depending on the terms of your plan, your debt repayment situation could become much more affordable.

However, a Washington debt management program isn’t right for everyone. These plans only cover certain unsecured debts like credit card debt and in some cases medical bills, whereas payday loans and secured debt generally can’t be consolidated in this way. Also, be prepared to live without new (and possibly) existing lines of credit, as you’re generally prohibited from taking on any more debt until your DMP is complete. Your credit card accounts may also be closed once they’re consolidated. With that said, the benefits afforded by a DMP often outweigh the drawbacks. As a result, it is important to think carefully about your own situation before either committing to a DMP or committing to an alternative. 

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

A Washington debt management plan is just one type of debt relief that falls underneath the debt consolidation umbrella. Debt consolidation can take two forms: debt consolidation loans and DMPs. Debt consolidation loans can operate as simply as transferring credit card bills to a card with a much lower interest rate or they can involve taking out a new loan or home equity line of credit in order to pay off existing debt. Debt consolidation loans and DMPs are used to lower monthly payment obligation amounts and often feature lower interest rates than users are currently paying. 

Both debt relief options roll multiple accounts into a single account to be paid monthly. The big difference is that a debt management plan isn’t a loan – unlike securing a consolidation loan, you don’t need a minimum credit score to qualify for a DMP. Also, with a loan you’ll also be able to keep your credit card accounts open and establish new lines of credit, but once you enter a DMP credit card companies will generally close your accounts. 

How to Become Debt Free with a Debt Management Plan in Washington

Getting out of debt isn’t easy, but the right information can help you make good choices along the way: Washington DMP provides an opportunity to repay your debts in a streamlined fashion. Read on to learn how working with a credit counseling agency to develop a realistic, consolidated repayment plan with your creditors can put you on the path to financial freedom.


Find a Credit Counseling Agency

Before you create a Washington debt management plan, you’ll need to find a trustworthy credit counseling agency to act as an administrator for your DMP. These agencies and their counselors must be licensed if they are operating in Washington. You can pick between a for-profit or nonprofit credit counseling agency but for-profit counseling agencies charge their consumers for their services, and nonprofit agencies don’t charge a fee for their initial consultations. Nonprofits offer free credit counseling consultations that you can use even if you decide not to use their professional services, so seeking one out is an advisable first step. Remember that while an initial credit counseling session provided by a nonprofit credit counseling agency will be free, services like DMP administration do generally come with fees. Before you work with a nonprofit credit counseling agency to construct a DMP, you can ask questions about how you’ll meet, fees, what happens if you can’t afford fees later, and the compensation method for counselors – commission-based counselors may try to sell you on pricier services for their own benefit. 

When finding a credit counseling agency, you should do some research to better ensure that any agency you’re interested in working with is reputable:

  • See if the company is in good standing by checking with the Better Business Bureau

  • The Washington Attorney General’s website will feature any complaints filed against the agency by Washington residents, 

  • For nonprofits, make sure the agency you choose is a member agency of the NFCC (National Foundation for Credit Counseling), the  largest nonprofit financial counseling organization in the United States. The NFCC only accepts members certified by an independent company, the Council on Accreditation (COA), as employing best professional practices. 

Make sure you do your research before making your final decision. If you aren’t comfortable with the agency at any point in the counseling process, go somewhere else.

What to Expect at Credit Counseling

Washington credit counselors can advise you on a variety of topics including personal finance, bankruptcy, bankruptcy alternatives, improving consumer credit, and debt management programs. The goal of your initial, no-cost credit counseling session is to discuss your financial situation and create a plan to get your finances back on track. Your initial counseling session will conclude with your counselor offering personalized recommendations for your financial well being. 

You should gather some basic documents before your initial session to make the conversation as productive as possible. You’ll want information regarding your:

  • Income, 

  • Expenses (utility and mortgage bills, cell phone bills, etc.), and 

  • Debts. 

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. A free copy of your credit report will have a great deal of account and debt information and will serve as a helpful tool as you gather this information. Though your counselor can make recommendations about debt solutions that may work for you, the final decision concerning how to proceed is yours. Remember you don’t have to decide immediately, and it’s not a good sign if your credit counselor pressures you to make a decision at the end of the counseling session or pushes you towards a specific solution. However, if a licensed credit counselor tells you that you’re a good candidate for a Washington DMP, this advice is probably very solid and you may want to strongly consider this option.

Making the Decision & Getting Started

Before you make a final decision about entering into a Washington 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? These fees are legal in Washington, usually amount to no more than $50 per month, and are built into your monthly payment amount. Washington also has laws limiting fees that a for-profit agency or debt relief company can charge: the total fee for adjusting services can’t exceed 15% of the total debt you list – including fees by any company administering the money you pay towards your debts. Ask if your agency has a good working relationship with any of your creditors. Having a positive, established relationship can make contacting creditors easier and make acceptance of your plan go more smoothly. 

Make a budget and then think about whether your budget is realistic and you can afford the payments every month.  If you break from your Washington DMP, the penalties and default interest rates that follow could leave you much worse off financially than before you started the DMP. Also, remember to look at all your options. Not every solution works for everyone. In some cases, bankruptcy may be the best choice to erase most or all your outstanding debt. If you have questions about bankruptcy, Upsolve can help you find a Washington bankruptcy lawyer so you can better assess whether this option might be right for you.

Put Together your Washington Debt Management Plan

Your credit counselor will ask for a lot of very detailed financial information from you while creating your Washington debt management plan to make it as comprehensive, effective, and realistic as possible. The information they need is more detailed than what you brought to your initial counseling session:

  • Bank account information, 

  • Detailed credit card information, 

  • Current loan statements, and 

  • Cardholder agreements from your credit cards. 

If you don’t have the agreements your credit card companies mailed to you, contact them for a copy or look it up online. Your counselor will need your specific account terms when they contact your creditors, and the agreement lays out those terms. 

Go back over your Washington DMP and the financial documents used to create it. Are the due date and payment amount realistic for you to handle every month? Did you leave off any expenses from your budget, however small? Think seriously about whether you will be able to stick to your budget for the next few years. If there are any nagging questions or any details still bother you (no matter how small), now is the time to say something. Your final plan will be sent to your creditors, and once they accept the plan you are usually locked into those terms until your debt is repaid. 

Begin Payments

You’ve worked hard to put a Washington debt management plan in place; now your main job is to make your monthly debt payments (on time and in full) until you are free and clear of your consolidated debt. You should receive your payment due date and monthly payment amount from your credit counselor before your DMP kicks in. Mark them on your calendar or set a reminder on your phone, but do not forget to make these payments. Pay on time every month. Pay early if possible and consider making extra payments if you come into additional income. Failure to make your payments on time could leave you in a very precarious financial position. Your counseling agency will reach out to creditors to secure acceptance of your Washington DMP once you start making payments. If you don’t get a response right away, don’t worry. It takes time to establish communication and agreement. Just keep making your payments in the meantime.

How to Stay Current with your Washington Debt Management Plan

Your debt management program is coming along – you’ve finalized your plan and your creditors accepted it. It’s critical from here on out that you make your payments on time every month. You and your credit counselor have examined your finances and created a realistic plan for what you could spend while still affording your payments. Don’t let that work go to waste. Stay on budget, track your spending to avoid needless expenses, and set aside money both for emergencies and large, expected expenses. 

If an emergency expense comes up and you think you need to use credit to cover it, wait until you talk to your counselor and confirm that your use of credit won’t violate the terms of your Washington DMP. DMPs generally prohibit new credit and taking on any new debt until everything is paid off. Also, if there are any changes to your income or expenses, contact your counselor right away because it is far better to be proactive than reactive when it comes to the success of a DMP. 

Finally, don’t forget to find ways to celebrate milestones of progress as your debt shrinks. You can ask your counselor to alert you when you’re approaching one so you can mark it on your calendar and enjoy the progress you’ve made. Staying motivated helps to ensure that you continue to make all of your payments on time. 

Washington Debt Consolidation

Debt consolidation is a type of debt relief that combines debts with high interest rates, like credit card debt, into a single account that generally features lower monthly payment obligations and lower interest rates. Debt consolidation can be accomplished by DMPs and debt consolidation loans. Washington debt consolidation often involves securing a loan with lower interest rates, like a home equity line of credit, a credit card balance transfer, or personal loan to pay off your other debts. However, their usefulness is relatively limited – borrowers with good or excellent credit scores are usually the only ones who qualify for a debt consolidation loan.   

Washington Debt Settlement

Washington debt settlement can work well if you have the funds to offer lump sums to your creditors in exchange for partial debt forgiveness and the closure of your account. However, creditors don’t have to accept your offers. While your account remains delinquent during debt settlement negotiations, your creditors may report your delinquency to the credit bureaus, can give your debt to a collection agency, or even sue you. Generally, debt settlement is only a good option if your credit is already damaged and you have the means to fund significant offers right away. 

Washington Bankruptcy

In some situations, filing a Washington bankruptcy may be the best choice for you. Bankruptcy is often a quick, effective way to eliminate credit card debt and other unsecured debts. It can also relieve you from the stress of collection calls and other harassing tactics used to get you to pay what you owe. However, it will negatively impact your credit at first, so it’s generally a good idea to contact a Washington bankruptcy lawyer for professional advice on whether bankruptcy is right for you. If you want to file but are worried about the cost of hiring a lawyer, Upsolve may be able to help you handle the process of filing on your own for free.



It's easy to get help

Choose one of the options below to get assistance with your bankruptcy:

Free Web App

Take our bankruptcy screener to see if you're a fit for Upsolve's free web app!

Take Screener
5089 families have filed with Upsolve! ☆
OR

Private Attorney

Get a free bankruptcy evaluation from an independent law firm.

Find Attorney
3362 people found attorneys this month

Upsolve is a 501(c)(3) nonprofit that started in 2016. Our mission is to help low-income families who cannot afford lawyers file bankruptcy for free, using an online web app. Spun out of Harvard Law School, our team includes lawyers, engineers, and judges. We have world-class funders that include the U.S. government, former Google CEO Eric Schmidt, and leading foundations. It's one of the greatest civil rights injustices of our time that low-income families can’t access their basic rights when they can’t afford to pay for help. Combining direct services and advocacy, we’re fighting this injustice.

To learn more, read why we started Upsolve in 2016, our reviews from past users, and our press coverage from places like the New York Times and Wall Street Journal.

Close

Considering Bankruptcy?

Try our 100% free tool that thousands of low-income families across the country have used to file bankruptcy themselves. We are funded by Harvard University, will never ask you for a credit card, and you can stop at any time.

Get Your Fresh Start