What to know about debt management plans

| Jan 12, 2021 | Bankruptcy |

If you’re having trouble paying off your debts in Wisconsin, there are a few steps you can take before you resort to filing for bankruptcy. You might be able to get your debts paid off if you work with a credit counseling agency. The agency could offer you a debt management plan that helps you consolidate your debts, reduce your interest rates and get the debt eliminated as soon as possible.

How does a debt management plan work?

To apply for a debt management plan, you can visit your local credit counseling agency. In exchange for a monthly fee, the agent will evaluate your situation and talk to creditors on your behalf so you can receive a comprehensive debt management plan. During the negotiations, the agency might get your creditors to lower their interest rates. You’ll be responsible for a single monthly payment to the agency each month that’s distributed among your creditors.

With a payment plan, most people get their debts paid off in as little as four years. You might even save money since you’ll be dealing with lower interest rates. The plan will also be easier for you to afford, enabling you to stay on top of your debts. This is a great solution for anyone who wants to pay off their debts without filing for bankruptcy.

However, it’s important to note that unlike some forms of bankruptcy, a debt management plan doesn’t discharge any of your debts. You’re still responsible for paying your debts every month. If you’re starting to think that there’s no way to pay off your debts, you might want to bring your questions about bankruptcy law to an attorney.

What if the debt management plan doesn’t work out?

If you’ve tried everything else, bankruptcy may be your final option. Bankruptcy has a drastic effect on your credit score, but if you can stay on top of your bills for the next several years, you’ll be able to rebuild your credit score and take control of your finances. An attorney could help you file for bankruptcy while keeping most of your assets.