Excerpt from TIME/NextAdvisor looks at debt management plans.
Featuring Katie Bossler, GreenPath Quality Assurance Specialist & GreenPath Expert
The TIME publication NextAdvisor puts the spotlight on getting out of debt. They note that too much debt can feel like a heavy weight holding you back in life. But often, it’s an obstacle that can be overcome.
It could be high-interest accounts or large balances – in these cases and more a debt management plan may be a good option for you if you’re struggling to repay.
Can you plan your way out of debt? In a word, yes. In fact, planning is one of the key ingredients to successfully paying down debt.
What Is a Debt Management Plan?
A debt management plan is a method of repaying debt in which you roll several lines of debt into a single repayment plan.
This is typically done with the help of a non-profit credit counseling agency, but you can also do it on your own.
Exploring options for getting out of debt? Debt management plans don’t work for every type of debt. They’re typically used to pay down unsecured debt, like credit cards, medical bills, utility bills, or most personal loans. Secured debt—meaning debt that is attached to a possession that can be taken away, like a house or car—usually isn’t covered. Federal student loans are usually left out of debt plans as well, since the lender is the government and can garnish wages to recoup non-payment.
Is a Debt Management Plan Right For You?
If you’re struggling to pay down your debt, is a debt management plan right for you?
The article notes that this approach may offer a sense of hope to those getting out of debt.
“When we ask clients about their goals, getting out of debt is sometimes not even something that they’ve ever considered a possibility. It’s definitely possible,” says Katie Bossler, a quality assurance specialist at GreenPath Financial Wellness, a nonprofit credit counseling agency with branches throughout the country.
When connecting with nonprofit counselors, you’ll first work with a counselor to discuss and review your financial situation, so you can better understand your options for getting out of debt. Usually, an initial session with a credit counseling agency is free. Sometimes, a counselor might recommend alternatives, like bankruptcy or a balance transfer credit card. It depends on how severe your situation is.
If a debt management plan makes sense for you, the counselor can negotiate with your creditors to waive fees and lower the interest rate on your accounts. The counselor will create a timeline to give you an idea when you can have your debt fully repaid. A debt management plan usually takes anywhere between three to five years.
If you’re thinking about getting out of debt by enrolling in a debt management plan, you should work with a nonprofit agency to connect with debt counseling guidance.
The article notes to be wary of scams from organizations that offer quick fixes to getting out of debt. Some less than reputable scam companies offer debt management, so vet them before signing up. Check the counseling agencies you might want to work with through your state attorney general and local consumer protection agency to see if any complaints have been filed, according to the Federal Trade Commission.
Read the full article from TIME/NextAdvisor.
Have Questions About Managing Debt?
GreenPath’s NFCC-certified debt counselors can walk you through your options when managing debt. 91% of people served by GreenPath feel better prepared to handle their finances. Together let’s make a plan for managing your debt to support your goals.
Katie Bossler has been with GreenPath since 2003. She currently serves as a Quality Assurance Specialist and is based out of our Detroit office. Katie passionately believes everyone can achieve financial wellness and is grateful to dedicate her work in helping GreenPath remix the American Dream so it works for everyone.
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