Featured:  CareOne Credit

Qualifying for a Debt Management Program

Not everyone is going to qualify for a debt management program. This is because there are certain requirements as to the type of debt that can be serviced by it and the employment situation of the debtor. The current status of the debt makes a difference too. Here are some areas that the credit counseling agency more than likely will evaluate when you are seeking relief through a debt management program:

You must have a steady job in order to qualify for a debt management program. This can oftentimes be a problem for those who find they are in financial difficulties because of a job loss and prolonged difficulty in getting a new job. Plus, some debt management programs require that you be in that job for a minimum number of days.

A debt management program will only handle unsecured debt. So they cannot do anything to help you keep your house, car, and make payments to secured creditors. Unless you have a significant amount of unsecured debt (usually through credit cards) you will not qualify for a debt management program.

A debt management program will usually require you to have minimum total debt. And the amount varies among the credit counseling agencies. It doesn’t make much sense to use debt management for small debt because of the administrative resources required.

Some debt management programs will assess if you are current or behind on payments. Different credit counseling agencies have different rules about who qualifies when it comes to the aging of their debt. Oftentimes, if a person is current on their payments but suspecting that their debt is beginning to create problems they might just be recommended for counseling only.

How many open credit accounts do you have? Some debt management programs might require a minimum number of open unsecured accounts too.

Can a reasonable debt management program plan be created? If the amount you have to pay into the debt management plan is too much then you cannot qualify for the plan. You want to make sure it is an amount you can handle every period it is due. This is why it is important for you to be very accurate about what your living expenses are with your credit counselor because they have to be paid first. Understand too that if you are not able to make all of the payments into your debt management plan then that is money lost and it did nothing to bring you out of debt.

Shop around for a debt management program. This should be obvious but it is easy to fall for the first program that promises an answer to your debt problem. Only you know the scale of your debt. To put it another way, $5,000 of debt is much different than $20,000 of debt. And, $5,000 of debt where you are 2 months behind in payments is much different than $20,000 of debt where you are 8 months behind in payments. If your debt situation is much more like the latter example and you qualify to be in a company’s debt management program right away then you need to shop around to see if you qualify for others’ debt management plans too. In other words, if you are approved for a debt management program too easily, then see if others will take you just as easily. This gets more important relative to the complexity of your debt. If you had a serious legal problem, you would not want just any lawyer to help you. You should treat your debt problem the same way and carefully scrutinize any company you solicit for help.

Related Posts:

Comments are closed.