What many people don’t realize is that, when it comes to debt management, programs can’t do for you what you couldn’t do for yourself. The main advantage of entering a debt management program is that someone else does the leg work for you. However, it is possible to take care of debt management on your own. Jim at Bargaineering points out that, really, setting up your own debt management plan only requires two steps:
- Budgeting: Figure out how much you can put toward debt repayment each month, and determine an order for paying off your debts. (This can be done in a way similar to determining a debt pay-off with aggressive debt reduction.) Then, of course, you have to live by your budget.
- Contact your creditors: This is the part that most people use debt management programs for. However, it is possible for you to speak with someone who can waive fees and lower interest rates. You will have to explain your situation honestly. Let your creditors know that you want to meet your obligations, but that things are tough. Most creditors are willing to work with you through temporary interest rate reductions and by waiving some fees.
Throughout the process, though, it is important to be polite and honest. This can be difficult in some cases, since debt and money problems are such emotional issues. However, it is vital that you work at controlling your emotions and speaking in as professional manner as possible.
It is also possible to engage in debt settlement (sometimes called debt negotiation) on your own. In this scenario, you actually negotiate to pay less than you owe. This can be a little more difficult on your own, since the presence of some sort of legal representation can help move things along. Still, though, it is possible for you to contact your creditors and let them know (politely), that you cannot meet your obligations and that you are willing to pay, now, a lesser amount. Some creditors, rather than risk losing more due to bankruptcy, will agree. However, you usually have to be able to demonstrate financial hardship.
There is no need to pay fees to have someone else set up a debt program for you. However, before you do anything, it is important that you consider the legal ramifications. I am not a legal adviser, nor am I a financial professional. You should probably speak with a professional before proceeding.