Select Page

Credit Counseling

The Debt Management Concept, Part 1


The basic steps to manage your way completely out of consumer debt

1. Make a Quality Decision to refuse to take on any new debt.

This means that you and your family unit are totally committed to become debt free and there is no option to even consider debt when a need arises. This level of commitment must be stronger than a New Year’s Resolution or some emotional decision made with little thought.

2. Determine the root cause of the consumer debt problem.

There are several factors that can get you in over your head to where you can at best make minimum payments on your accounts. Most consumers fall into one of the primary areas below:

Poor Spending Habits – This could be on the part of your self, spouse, or family member. If there is a lack of self-discipline then this issue needs to be addressed with a reality discussion and educational materials. provides free material via the website, educational brochure, and seminars in our Virginia Beach office. also offers detailed educational material that includes books, CD-ROM, and Internet testing system to measure your progress. The cost of these materials are credited to you upon either successful completion of the course testing, starting of a debt management plan, or starting of a debt resolution plan.

:: Educational Materials ::

You can’t borrow your way out of debt. You MUST get the financial education to understand the importance of discipline or your plan is designed to fail. You can’t keep buying time with refinances, consolidations, and restructuring.

Life Event – Most typically consumers get into high debt due to a life event. A life event includes divorce, job downsizing, auto accident, physical illness, or death of family member. Basically you are financially literate, have good discipline, and the desire to get your financial house back in control. For these persons, the educational element is not needed.

3. Develop a Spending Plan

You must exercise your responsibility concerning sources of your income and recording exactly where your income goes each month. This step involves planning to maximize your family income and minimize your family expenses to those that are truly necessary and of a priority to your situation.

Typically, this is called a budget that indicates a restriction to your life and is not favorably received by the family. Actually, you need to consider your plan as a “spending plan” because YOU are deciding which priorities exist and YOU make the choices of where your money goes each month. There is a distinct freedom when you control your financial resources even if it means that no funds remain to provide for all the needs at this particular time. Over time the real priorities will surface and the less important desires will fade. In summary, this step means “Earn all you can and spend less than you earn”.

Spending Plan worksheets and discussion are available by calling for help in working this out and getting started correctly 1-800-234-6781.

4. Utilize a Strategy (Tool) to Eliminate Your Debts

From the spending plan exercise above you have determined a monthly amount available to be directed for consumer debt that includes credit cards, finance company accounts, and store cards.

Based on this amount you will be able to select the correct tool to use for clearing this debt in the best possible way. Remember that each tool has it’s own pros and cons associated with it. You probably will want to select the tool that matches your available funds each month.

Tool Selected: Do it Yourself Plan (DYP)
Make Extra Payments
Debt Management Plan (DMP)
Credit Counseling
Debt Resolution Plan (DRP)
Delinquency Status: Current on payments From Current up to 3 months late 3 months or later on payments


~Interest Rate Charged
~Monthly Payment *
~Time to be Debt Free

*Payment based on $20,000

~Normal Rate on Card
~10-15 years
~Average 8 to 11%
~3-5 years
~Zero Interest Paid
~Minimum of $100.00
~2-4 years
Risks: Account Status Open (requires discipline) Closed Closed prior to starting
Negative Credit Score Score stays same Score lowers first 6 months then goes up Score is low prior to starting. Increases nearing completion.
Potential for Judgement No Risk No Risk 5-10% chance of suit
Fallback Strategy Credit Counseling Debt Resolution Bankruptcy

Need immediate help?


Click for more info