 TITLE: How to Know if a Debt Management Plan Makes Sense CONTENT: Alternatives to Debt Management\n-------------------------------\nEven if a DMP is starting to sound like a good decision, weigh it against other potential options:\n**DIY**: Call the credit card companies, explain that you want to concentrate on paying off your debts, and ask if they will reduce the interest rate for you. Some may. Then pay your creditors with the same system: Determine a fixed amount you can send every month, and stop charging. As one account is paid off, pay more to the others until you're debt-free.\n**Debt consolidation loan**: If your credit scores are decent, you may be able to use a consolidation loan. With it you bundle all or most of your debts into one loan that offers a lower interest rate. Even if the lender charges an origination fee of a few percentage points, you may still come out ahead. And if the term is longer than five years, the monthly payment may be far lower than what it would be with a DMP.\n**Balance transfer credit card**: Another way to self-manage debt is to get a low or 0% annual percentage rate (APR) balance transfer credit card. To qualify, your credit scores usually need to be 670 or higher, but the savings can be tremendous. If the APR on a credit card with a balance of $8,000 is 26%, and you delete it in 15 months at zero interest, the accumulated interest you'd save would be $1,456. Use a balance transfer credit card, pay it off within the same time frame, and the only extra charge you'd pay would be a transfer fee (typically 3% of the transferred amount) of $240.\n**Bankruptcy**: Although this should be a very last choice, there may be no other options for some severely indebted people. A Chapter 7 will wipe out all allowable unsecured debts so you can start fresh, but you have to qualify and can lose property. A Chapter 13 lets you pay a wide variety of debts through the court over three to five years. Interest is dischargeable and you get to keep your property, but your spending may have to be pared down. Both bankruptcy types have dramatically bad effects on your credit scores. END