Credit Counseling Organizations

• Before you jump aboard with a credit counseling organization, you'll need to do some research. Since fraudulent organizations are more than happy to take your money and do nothing for your debt, you'll have to make sure to select a reputable organization. If there's an organization you're interested in, look it up online with the word "reviews" or "ratings" to see what others say about it.
  
  

Debt Consultation

• The first thing you'll do before you enroll in a DMP is have a consultation with a counselor, either over the phone or in person. Ask questions about the services the organization offers, the fees it charges, if the organization is licensed in your state, if it offers free information about its debt management programs and its confidentiality. If the counselor is hesitant to provide certain information or pressures you into giving donations or accepting additional services, look for a different counseling organization.
  
  

Enrolling in a DMP

• Once you have decided to enroll in a DMP, make sure you have a written copy of your DMP's rules and regulations. Make sure you understand the DMP's fees, and keep an eye on your bank statement to ensure the DMP doesn't make unauthorized charges. You will also need to know what will happen if you miss a payment, make a late payment, or if the credit counseling organization goes out of business. Also, make sure you understand how the DMP is going to divide up your money among your debts.
  
  

Paying the DMP

• The DMP administrator works as a middleman. You pay a certain amount to the DMP each month, then he divides up your payment and pays your creditors according to the plan he developed with you. Sometimes this will be set up as an automatic transfer, so that you don't have to juggle multiple credit card bills--instead, you pay a set amount to your DMP every month and the administrator deals with your debt.
  
  

How a DMP Helps You

• Though the DMP will initially cost you money and time, it can improve your financial situation in a couple of ways. First, the administrator can analyze your debts professionally and determine what should be paid off first so that your credit score is improved. Also, she can negotiate with your creditors so that your money goes toward paying off your actual debt rather than your interest or other fees.