How to Become Debt Free with A Debt Management Plan in West Virginia

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Written by Upsolve Team.  
Updated February 20, 2020

Summary

If you want to learn how to consolidate your debt without taking out a new loan, keep reading to learn about creating a West Virginia DMP. We’ll share the pros and cons of various debt relief options so you can find a debt solution that’s just right for you. 

If you’re in West Virginia and hunting for a solution to manage debt, you have a lot of company. Local businesses are struggling with debt, and so are many West Virginian families. You may have heard of bankruptcies, but have you heard of debt management plans? A West Virginia debt management plan is a debt relief option that can put you on a new path to pay off your debt in a few years by combining your debts and making a single monthly payment for all of those debts to a credit counseling agency. 

A debt management plan, also known as a DMP, is a way to pay your unsecured debt by making one monthly payment instead of several smaller payments. If you decide to enter into a DMP agreement, negotiations with creditors will be made on your behalf by a credit counseling agency. You may be able to get lower interest rates and lower minimum payments from creditors under the terms of your DMP. An administrator of your West Virginia DMP will take your lump sum monthly payment, then make your payments to creditors on your behalf. 

A DMP is not a debt solution for everyone. A West Virginia DMP works great for unsecured debt like credit cards, personal loans, and even some medical bills, but it doesn’t manage debt for secured debt like mortgages and truck loans. Student loans and payday loans cannot usually be covered in a DMP. It’s common for a DMP to be completed in 2-5 years. 

Is a DMP the Same as a Debt Consolidation?

A debt management plan (DMP) and a debt consolidation loan are both types of debt consolidation. A DMP consolidates monthly payments so you only have to make one lump sum monthly payment to a credit counseling agency for the account you’ve merged. A debt consolidation loan acts as a balance transfer so that you can pay your existing debts and be left (only) with a single payment each month for that new line of credit. Under both scenarios, you’ll have one new loan payment to replace your old payments. 

Both types of debt consolidation have their advantages and disadvantages. You’ll have to qualify for a new credit line to get a debt consolidation loan, and that means you’ll need a good credit score. You don’t need perfect credit to qualify for a DMP in West Virginia, but you’ll need income for the monthly payments on your DMP. 

How to Become Debt Free with A Debt Management Plan in West Virginia

If you want to learn how to consolidate your debt without taking out a new loan, keep reading to learn about creating a West Virginia DMP. We’ll share the pros and cons of various debt relief options so you can find a debt solution that’s just right for you.


Find a Credit Counseling Agency

In the mountains of West Virginia, a credit counseling agency may not be next door, but you may be able to have a counseling session online or on the phone if you don’t live near a counseling agency. Upsolve can help you find a nonprofit credit counseling agency that doesn't charge a feefor an initial credit counseling session. You can also visit the website for the National Foundation for Credit Counseling to find an accredited credit counseling provider. 

The National Foundation for Credit Counseling (NFCC) is a well-known agency that works with nonprofit credit counseling agencies to help people reach their goals to be debt-free. The NFCC maintains a list of accredited nonprofit credit counseling agencies and certified nonprofit credit counselors. The NFCC is approved by government agencies and is a helpful resource to learn more about credit counseling services in West Virginia. Your first visit with a nonprofit credit counselor is free and a smart investment of your time. 

Before you commit to attending a credit counseling session with a particular agency, make sure to research its reputation. For-profit credit counseling organizations (many of which may operate as scams) in West Virginia must be registered with the West Virginia Secretary of State according to the West Virginia Consumer Credit and Protection Act. The Better Business Bureau (BBB) records complaints, and you can search the BBB website for complaints on credit counseling agencies. You can also check with the Federal Trade Commission (FTC) and the West Virginia Attorney General for current scams. You can save time by choosing an NFCC nonprofit credit counseling agency since it’s verified to be reputable. You’ll also be able to take advantage of the free first consultation and that will save you money. 

What to Expect at Credit Counseling

The first free meeting with your certified credit counselor will be confidential and take about an hour. Nonprofit accredited credit counselors are trained in financial management. Your credit counselor will analyze your debt relief options, talk about your financial goals, and develop an action plan. Your certified counselor will let you know whether a West Virginia DMP might be the best option or whether you should look at other debt relief solutions such as a Chapter 7 or Chapter 13 bankruptcy. 

Before the first meeting, collect and organize your bills. Make sure you bring all your credit card bills, collection agency notices, payday loan bills, medical bills, and other debt documents to your first meeting. Include a list of living expenses. You and the credit counselor will review your secured debt and unsecured debt, so be sure to point out loans secured with collateral. The credit counselor needs to have a clear picture of your expenses, total debt, and type of debt before creating a financial action plan and making recommendations on your behalf. 

You’ll also need proof of income. Your income includes income from work, retirement, VA benefits, government assistance, lawsuit settlements, and any other source. This will help the counselor get a realistic view of monthly payment possibilities. You’ll leave the meeting with an action plan in hand, ready for the next step.

Making the Decision & Getting Started

Deciding to start a West Virginia debt management plan is a big decision. The credit counseling agency shouldn’t pressure you to commit—there are other forms of debt relief that might be better for you. Review all of your debt relief options before signing an agreement. If you don’t think you can make the lump sum monthly payment, and/or you have a mortgage and car loan to worry about, consider talking to a bankruptcy lawyer first. 

Take a look at the DMP fees before you decide. Ask about setup fees, maximum fees that creditors can charge, and penalty fees. Missed payments can result in a domino effect of debt. You should also make sure you have an emergency fund. Even the best bill payers have emergencies. Once you have reviewed all of the fees, your emergency fund, your debt relief options, and your budget, you can confidently create your West Virginia DMP or explore alternative forms of debt relief. 

Put Together Your West Virginia Debt Management Plan

You and a credit counseling agency will put together a West Virginia debt management plan that works for you and your creditors. After your first free visit with the credit counselor, you’ll work with the agency to fine-tune the details. You’ll probably need to provide more paperwork, such as bank statements and credit card account agreements. These documents help plan due dates, timelines, and legal obligations. If you don’t have a copy of your credit card agreement look on the credit card’s website. You can also check with the Consumer Financial Protection Bureau for company contact information. 

It’s important for you and your credit counselor to plan a comfortable payment amount and timeline. If you’re more comfortable making weekly or biweekly payments, talk to your credit counselor about options. Be sure to discuss the details of late payments, emergencies, and defaults. After you agree to a payment schedule and timeline, you’ll sign an agreement. When your West Virginia DMP is put together, you’ll have the due dates, fees, and timelines spelled out along with the date of your first payment.

Begin Payments

Payment on your West Virginia debt management plan will generally begin after a payment schedule and agreement is signed. The date of your first payment should be noted in the signed contract along with a payment schedule. The payment schedule shows when monthly payments are due. These dates should be reviewed against your personal budget before you sign anything.

Be prepared for credit card cut-offs and closed accounts while you’re making payments. Credit bureaus will show that you’re on a payment arrangement. This will have a temporary negative impact on your credit report. Once your debt is being paid consistently, your credit score will improve again.

How to Stay Current with Your West Virginia Debt Management Plan

To stay current with your West Virginia DMP, plan your budget before the first DMP payment. Budget for emergencies, holidays, entertainment expenses, taxes, and yearly vehicle expenses. If you have an emergency that may cause a late payment, call your credit counseling agency so they can try to prevent default fees. Consider starting a tracking system for your DMP payments to keep your eye on the goal. Be sure to set reminders before and on the payment day. If monthly payments sound tough, be sure you review all of your debt relief options before you decide which debt relief program is best for you. 

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West Virginia Debt Consolidation

Is your credit good? A West Virginia debt consolidation loan is an alternative solution to a debt management plan. A debt consolidation loan serves as a balance transfer used to pay off your debt. This option will allow you to streamline your debt payments without having to involve a credit counseling agency “middle man.” You can review your credit score to see if a debt consolidation loan will work for you. Be sure to discuss consolidation loans with your credit counselor before committing to this option and be cautious of scams.

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West Virginia Debt Settlement

If you’d like to save money and you’re not too concerned with your credit rating, a West Virginia debt settlement arrangement may be a viable debt relief option. In a West Virginia debt settlement program, you’ll pay a lump sum amount to your creditor that is less than the total amount owed. In other words, if you have a balance of $100 you may be able to close the account by paying only $75. In a West Virginia DMP, you pay the entire balance of your debt. In a debt settlement plan, the balance you don’t pay is forgiven by creditors. You may owe taxes on forgiven debt that’s over $600. Note that a debt settlement program will have a temporary negative impact on your credit score.

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West Virginia Bankruptcy

If your total debt is higher than your income, consider filing for a Chapter 7  or Chapter 13 West Virginia bankruptcy instead of using a West Virginia debt management plan. Bankruptcy might help clear your credit card debt and medical bills. If you’re facing wage garnishments and judgments, filing for bankruptcy will halt collection actions and reduce collection calls from creditors. You can talk to a counselor at a credit counseling agency about the pros and cons of bankruptcy and arrange for a free consultation with a bankruptcy attorney. You can also file bankruptcy on your own without an attorney with the help of Upsolve. 

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