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Using a debt management plan to pay off credit cards

A lot of South Carolina residents have overwhelming credit card debt. In an effort to pay their balances down, some people enroll in debt management plans offered by credit counselors. Such a plan can allow people to consolidate all of their debts into one monthly bill with a lower interest rate.

Debt management plans can be difficult to complete, however, and they typically require participants to make significant changes in their spending habits. According to one consumer credit counseling service, about 55 to 60 percent of people who enroll in debt management plans follow them to completion. The repayment period for these plans may be up to five years, and many debtors drop out early because they can no longer afford the monthly payments.

To finish a debt management plan successfully, a person will probably have to follow a detailed monthly budget. Straying from a budget will be more difficult for participants because they will have to seek approval from their counselor to use any additional credit. Many credit counselors tell debtors to include contributions to an emergency savings account in their monthly budget.

When plan participants lose their main source of income, they may have to drop out of the plan and start making smaller payments on their debts. To avoid this situation, a debtor may want to meet with an attorney in order to find out if filing for personal bankruptcy would be an advisable solution to their particular situation. Since Chapter 13 also requires monthly payments to be made, it is likely that Chapter 7 would be the only alternative if the eligibility requirements were met.

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The Huggins Law Firm, PA

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