How to Become Debt Free With a Debt Management Plan in Wyoming
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Getting out of debt is an uphill battle, but with the right information and some good choices you’re well on your way! There are a lot of options to consider, but a Wyoming DMP can be a good option to pay off your debts instead of just keeping your head above water. Read on to learn about the process and how working with a credit counseling agency to develop a realistic, consolidated repayment plan can be your first step to financial freedom.
Written by the Upsolve Team.
Updated August 11, 2023
Getting out of debt is never easy, but a debt management program may be a good way out. In a debt management program (DMP) you work with a credit counseling agency to develop a single, consolidated monthly payment plan the agency will divide between all your creditors until your total debt is paid. The credit counselor working with you at the credit counseling agency will negotiate with your creditors to have your plan accepted. Negotiations will usually center around lower interest rates and acceptable minimum payments. If your creditors agree to your Wyoming debt management plan, you may pay off your debt faster and with lower monthly payments. Debt management plans can also consolidate debts for those who can’t qualify for other debt relief options due to a low credit score.
A DMP isn’t right for everyone. Only some types of unsecured debts like credit card debt and, in some cases, medical bills are covered. If you have loans or secured debts like car loans, you’ll probably want to choose a different solution. Additionally, you’ll likely notice a negative impact on your credit score when you begin your plan; stick to the plan and your score should rise noticeably before your debt is gone. Also, consider if you can live with no new credit and without your existing credit cards – companies close cards when a DMP begins and prohibit taking additional credit once until the plan is complete. There is a lot to consider when picking the path you’ll walk to financial freedom, but Upsolve is here to help explain the process so you can make the best choice for you.
Is a DMP the Same as a Debt Consolidation?
Debt management programs and debt consolidation seem similar, so it’s easy to believe they’re the same. That’s not completely right. Debt consolidation is a broad name for several debt relief options – including debt management program – but options that fall into the same category which don’t involve a repayment plan. Most people using the term consolidation are referring to a specific type – debt consolidation loans.
A DMP uses a credit counseling agency as a middle-man between you and your creditors. You take out consolidation loans yourself in the form of lower interest loans like mortgage refinances or transfer high balances from several credit card accounts to a single lower interest card. A Wyoming DMP, unlike a consolidation loan, appears on your credit report, and once you begin credit card companies will be close your lines of credit when they close your accounts until you pay off your debts. Debt consolidation loans can, however, be risky. If you default on a secured loan you may lose your home or car, and you are still no closer to paying off your debts. However, if you have good credit this may be an option to consider.
How to Become Debt Free with a DMP in Wyoming
Getting out of debt is an uphill battle, but with the right information and some good choices you’re well on your way! There are a lot of options to consider, but a Wyoming DMP can be a good option to pay off your debts instead of just keeping your head above water. Read on to learn about the process and how working with a credit counseling agency to develop a realistic, consolidated repayment plan can be your first step to financial freedom.
Find a Credit Counseling Agency
Before you create a Wyoming 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 Wyoming. You can use a for-profit credit counseling agency, which charges clients for their services, or a nonprofit credit counseling agency that relies on outside support to function and 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, as well as what happens if you can’t afford them. You may want to ask how your credit 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 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 a counseling organization like the NFCC, you can also check the Better Business Bureau and the Wyoming Attorney General’s website for a history of complaints against the agency. The more informed you are, the better prepared you are to pick a good agency.
What to Expect at Credit Counseling
Don’t worry about your initial credit counseling session. It’s just a conversation with a credit counselor at the credit counseling agency to go over your finances and talk about options that may work for you. You may even be able to do it over the telephone, and it should take less than an hour. Getting together relevant documents before the meeting can help the session be productive and smooth. 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 can be easily obtained. After reviewing your finances your counselor should help you set financial goals and review debt relief options that may be right for you. However, the counselor cannot make any decision for you – it’s up to you to review the facts, think about your situation, and make your own choices.
Making the Decision & Getting Started
Ask questions before you move forward with a Wyoming DMP. Does the credit counseling agency have set-up fees or monthly fees for your debt management plan? If so, how much? They’re permitted in Wyoming and are usually nominal and built into the monthly payment. Find out the relationship your credit counseling agency has with your creditors – good relationships can make creditor agreement more likely. Whatever answers you hear, you don’t have to make a decision right away; it’s not a good sign if your credit counselor pressures you to decide or keeps pushing a specific choice.
You should also reflect on your own situation. Can you stick to a budget and afford the payments? Can you commit to payments for the long-term? If not, with penalties and defaults you could be financially worse off than you began. Have you explored all options? For some, other debt solutions are a better fit. Bankruptcy may even be the best choice. If you have questions about bankruptcy, Upsolve can help you to find a Wyoming bankruptcy lawyer who can help answer your questions. However, at the end of the day you must choose your best path. Now? It’s time to plan your road to recovery.
Put Together Your Wyoming Debt Management Plan
In order to put together a realistic Wyoming debt management plan for you, your credit counselor needs a lot of very personal financial information. Your counselor will likely ask for at least your bank account and detailed credit card account information. You may need to provide cardholder agreements from your credit card companies so your counselor can reference your specific account terms when talking to your creditor. You likely received one in the mail, but if you can’t find it the company should provide you with another copy if you call them.
Take another look at your due date and payment amount. Is it realistic? Will it work for you? Re-examine your budget again to see if you included all expenses. You may want to track your spending for a few weeks to see if you missed any expenses. Is your budget realistic? Can you stick with it during your repayment plan? Speak up if anything bothers you. Ask any final questions you have regarding total monthly DMP fees, when to expect your creditors will be paid, when you can expect creditors to respond to your plan, and if working with alternate pay schedules is possible. Be sure you’re comfortable with the plan, because once your creditors accept it, you’re in for the long haul.
Begin Payments
You’ve thought, you’ve discussed, you’ve planned, and now your job is to start paying your way to freedom from debt. Your counselor should’ve given you your payment due date and the monthly payment amount in your sessions. Mark them on your calendar and follow them exactly. Do not miss your payments. Pay early if possible, and if you have extra income consider making extra payments. Your credit counseling agency will contact your creditors and work secure their acceptance of the Wyoming debt management plan you created. It’ll take time for creditors to respond, so don’t panic if you don’t get immediate answers. You can always contact your counselor and ask for progress reports along the way.
How to Stay Current With Your Wyoming Debt Management Plan
Your Wyoming debt management plan is now in place – congratulate yourself on your progress! Your job now is to make your payments on time every month. If you made a budget – stay on it with spreadsheets, financial software, whatever method is best for you. You should have examined your finances during your counseling sessions, so you should know how much you can spend and still make payments. Avoid unnecessary expenses but remember to put money away for emergencies. You may have an expected expense coming up, but emergencies and unexpected expenses happen. Talk to your credit counselor before you use a credit card in an emergency and don’t have the funds available otherwise – you need to make sure this doesn’t violate your Wyoming DMP. Also, remember to celebrate as you make progress paying down your debts. You’ve worked hard, and you’re starting to see everything you’ve done pay off. Debt-free, here you come!
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Wyoming Debt Consolidation
Most people mean a debt consolidation loan when they reference “debt consolidation,” but a Wyoming DMP is also a type of debt consolidation. Debt consolidation encompasses a variety of options like taking out a loan with lower interest rates to pay off our other debts or transferring the balance of all your outstanding credit card debt to one so you’re down to a single payment. Though consolidation can sound tempting, remember Wyoming debt consolidation loans are often available only to people with good credit. Also, you’re just moving debt many places into one place, so consider whether you can afford to begin paying it down or still have debt you can’t afford to pay.
Wyoming Debt Settlement
A Wyoming debt management plan consolidates payments so you can fully pay your debts, but debt settlement offers your creditors a lump sum to settle for less than your total debt. Your DMP payments go from your agency to your creditors, but your Wyoming debt settlement payments pool in a fund your agency creates. Once the pool is large enough, the agency will use it to try and entice your creditors to settle for smaller lump sums. Though you may end up paying less, creditors aren’t required to settle. They’re also not paid waiting while your money pools into an amount large enough to make settlement offers. Before a settlement happens, creditors can report delinquencies to credit bureaus, give delinquent accounts to collection agencies, or file a lawsuit. You have to decide whether the risk and potential reward are right for you.
Wyoming Bankruptcy
In cases where other debt solutions aren’t a good fit, filing a Wyoming bankruptcy may be your best choice. Depending on your debts, bankruptcy may eliminate all of what you owe. However, some debts, like tax debts aren’t eligible. Though there are benefits to filing bankruptcy; discharge of eligible debt, a stop on collection calls and other efforts by collection efforts to get what you owe, there are some downsides. Bankruptcy takes up to 10 years to come off your credit report and will impact your credit score, at least for a little while. A Wyoming bankruptcy lawyer can help you decide if this is right for you. If you decide on bankruptcy but are worried about the expense, Upsolve can help you handle the bankruptcy yourself if you’re eligible.
