Before signing up for any Debt Management Plan, you want to take some steps to do research and prepare yourself. The more prepared and informed you are, the better you will understand the process and options that are available to you even before discussing the situation with your credit counselor.

1 - Talk to your creditors yourself

The fact is, many negotiations between a creditor and a credit counselor can be done by you. Creditors want their money and it may be the case that you can negotiate a better arrangement because you know your situation best.
The benefit of a Debt Management Plan is that all the negotiations are done for you; you simply make one monthly payment to the credit-counseling agency after you sign-up and they pay your creditors; and they may be able to provide a timeline for getting out of debt, which is really what the goal is. In going this route, you may have to agree not to use or apply for credit while participating in the Debt Management Plan.

2 - Find a reputable credit-counseling agency

Finding a reputable credit-counseling agency means research. Many of us have had trouble with debt at one point in our lives, so ask around and see if anyone has had success with a particular agency. Also, if you tink you have found one, check with the Better Business Bureau, check online to see if this agency is reputable. Another option would be to, again, talk with your creditors and see if they work with that company. For me it turned out that the agency I chose didn't work with two of the creditors that I owed the most to.

3 - Work out a budget

Before making any financial decision, one of the first and most necessary steps is to figure out just how much money you have coming in, how much is going out, how much of your spending is necessary and how much isn't. Deciding how much money you have coming in is easy, just look at your pay stubs - printed or otherwise.
Deciding how much you have going out is not always that easy and it's important to be honest and calculate everything. First, you need to gather your bills and your receipts for all expenses, necessary and unnecessary. Add everything up to get an idea about how much your spending. Second, list your expenses by necessary and unnecessary; and, no, that $9 movie is not necessary. While difficult to do sometimes, you will need to make a decision about what expenses you can eliminate. When you have made these decisions, you will then be able to see your financial situation for the future a little better and be better able to discuss your options with your credit counselor.

By Kelley Kilanski

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