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

Find a Credit Counseling Agency

One of the most important aspects of a Utah debt management plan is finding the right credit counseling agency for you. Make sure you're dealing with a nonprofit credit counseling agency. There are for-profit credit counseling firms that are sometimes called debt relief companies. The debt relief companies are in business to make a profit. This profit incentive may cause such firms to put their own interests ahead of yours. One way to make sure you're doing business with a reputable nonprofit credit counseling company is to see if they're a member of the National Foundation for Credit Counseling (NFCC). The NFCC is the oldest organization of nonprofit counseling agencies in the country. The NFCC has strict requirements for all its members.

It's always a good idea to ask how the credit counseling firm pays its credit counselors. It's a red flag if the agency pays the counselors bonuses or other incentives. Such incentives tempt counselors to put their own interests above your interests. You need to know these things before entering into an agreement with a credit counseling firm. Ask the credit counseling company about the cost of the initial credit counseling session. It should always be free since good counseling agencies don't charge for basic credit counseling. Credit counseling is sometimes referred to as financial counseling.

The first appointment will take forty-five minutes to an hour. This session may be over the phone, in an online meeting, or an in-person meeting. It’s good to have your credit card bills, other bills, paycheck stubs, bank account statements and credit reports on hand when attending this session. You can get your free credit report at annualcreditreport.com. Getting your credit report won't have a negative impact on your credit score.

What to Expect at Credit Counseling

At your first credit counseling session, your trained and certified credit counselor will get a general idea of your monthly expenses, income, and debts. You and your counselor will establish your short-term and long-term financial goals. Then, you and the counselor will create a plan of action for you to achieve these goals. Your creditors aren’t in the loop in these initial stages. Everything in this first session is confidential. Your creditors don't learn anything about your plan until you've signed off on your Utah debt management plan and have started making payments. At this point, in your Utah DMP, your counselor contacts your creditors to negotiate a better deal for you.

Making the Decision & Getting Started

If your credit counselor pushes you to make a decision at the end of your first session, you may be using the wrong credit counseling company. You owe it to yourself to take time to consider the pros and cons of the counselor's recommendations. You owe it to yourself to be comfortable with the process. It's important that you feel comfortable with the budget you'll have to meet to have a successful Utah debt management plan. If you have a family, are they ready to make the sacrifices necessary to stay on this budget? These are important questions since failing in a Utah DMP can leave you with higher interest rates, late fees, and a worse financial situation than before you started your debt management program. Have you considered other debt-relief options? Have you considered bankruptcy? It's always a good idea to do a free initial consultation with a qualified bankruptcy attorney to see what they can do for you.

Put Together Your Utah Debt Management Plan

When putting together your Utah debt management plan, your credit counselor will need more detailed information than in the initial session. They will need more detailed bank account information and detailed information about each credit card. Your counselor will need your credit card agreement for each credit card company. This is necessary for your counselor to negotiate better terms for you. If you don't know where all your credit card agreements are, you aren't alone. Few people keep all these agreements. There is an easy way to get your agreements though. You can use the Consumer Financial Protection Bureau's Credit Card Agreement Database to get a copy of your credit card agreement for your counselor to use.

Your creditors don't have to agree with the terms that your counselor wants. This is rarely a problem because the credit card companies know that you have options such as bankruptcy. The credit card companies would rather you pay in full at a lower interest rate than to get nothing from you in bankruptcy. Your counselor will know how far they can push your creditors to get the best deal for you.

Begin Payments

Make sure that you and your credit counselor are on the same page. Make sure you know the payment amounts you are to make and the correct due date. The most important thing that you will do during your Utah debt management plan is to make your payments on time. It’s also important that you pay any other bills that you have and stay on your budget. Once you've signed off on the Utah DMP and you start making payments on your DMP, your credit counseling agency will start negotiating with your lenders. Stay in touch with your counselor to get updates on a creditor by creditor basis. Check your monthly statements from the credit counseling firm to see who is getting paid what.

How to Stay Current With Your Utah Debt Management Plan

It's important to always track your spending. When you are in a Utah debt management plan, it’s crucial to track your spending so you'll stay on budget. There are some good online tools to help you track your budget and spending. These tools are to someone in a Utah DMP as a speedometer is to someone driving a car. It's easy to speed, and it's also easy to overspend. Take advantage of free online personal finance tools like Mint that can help you keep your spending on track. Mint and some other tools not only have web apps but also have phone apps for Android and IOS. Such tools can almost automate the tracking of your spending and budget.

Set up your budget to set aside money each month for expenses that happen less often than monthly. Such expenses might include renters’ insurance for an apartment or oil changes for a car. Also, set up a savings plan for emergencies. One easy way to put aside some money is to use Chime or Acorns and use their round-up functions to add to your savings. These mobile banks are no fee banks that will round each charge up to the nearest dollar and put the change into your savings account for you. Even with such automated methods, make sure that you are hitting your savings goal to have enough for unexpected emergencies.

If you have an emergency expense and you don't have enough in savings to cover it, let your credit counselor know if it’s going to impact your ability to make your Utah DMP payments. Your counselor has seen similar situations with other clients and may have an idea you haven't thought of. Or, your counselor may be able to negotiate a suspension of your payment requirements so you can deal with this emergency.