Five Benefits of a Debt Management PlanSimplify things by making a single payment. Many creditors will be able to help you with lower interest rates. As part of the negotiation, creditors can waive fees and lower the interest rate on your accounts if you agree to pay the debt through a DMP. A DMP is an informal agreement between you and your creditors to pay your non-priority debts.
While debt management has some advantages, it's not necessarily a perfect solution for paying off debt. If you think debt settlement is your only option and you need help with the process, choose a reputable debt settlement company. Many credit counseling agencies are nonprofit organizations that offer education and assistance to help people better manage their finances. In addition, because major creditors such as department stores, credit card companies, and banks often fund non-profit credit counseling agencies, the agency might try to convince you to choose a debt management plan where you fully repay your debts rather than file for bankruptcy.
In Chapter 13 bankruptcy, the amount you have to pay depends on your disposable income and the value of your non-exempt property; you could end up paying only a small percentage of your uninsured debt. If both you and your partner are struggling with debt, you may want to consider establishing a joint DMP where both of you are equally responsible for the payment plan. Many bankruptcy lawyers and debt settlement lawyers offer free consultations and will quote you a fee after evaluating your circumstances. Even if a for-profit debt relief company tries to help you, you'll probably have to pay a lot for services you could do yourself, or you'd be better off paying a lawyer or a legitimate credit counseling company.
For example, secured debt and student loans are not eligible for debt management plans, and credit counseling agencies can limit the amount of debt you can have to participate in one. Debt relief services, such as credit repair, debt consolidation, debt settlement, and debt management plans, are advertised on the Internet, radio, and television. The DMP is a tool that, along with a budget and financial education, will help you get out of debt and plan for a bright financial future. Debt management plans can only be used to pay off “unsecured” debts, such as money you owe that has not been secured against your property.
If you're not sure if this seems right for you, you may want to think about other options for dealing with your debts.