A debt management program or plan (also called a DMP) is a payment plan designed to help you eliminate high-interest rate credit card debt. You enroll in the program through a credit counseling agency that helps you find a monthly payment that fits your budget. You can cut your interest rate by half or more. It helps to pay off debts faster than doing it yourself.
Consolidate several debts into a single payment. Your credit rating may initially decline, as accounts are closed and you have less credit available. Enrollment in a debt management plan will be noted on your credit report, but it is supposed to be treated as neutral in credit rating. In the long run, as you control your finances, your credit rating is likely to increase.
If you think a DMP might be your best option for debt relief, start by choosing a credit counseling agency. Once you find a credit counselor you feel comfortable with, he or she will review your finances and help you create a budget, as well as decide if a debt management plan is right for you. Living in debt can be like carrying an insurmountable weight on your shoulders, but we're here to help. It's important to research the debt management company before accepting the terms or signing any paperwork.
Your debt management program is designed to be completed in 36 to 60 months and reduce your monthly payments and interest rates by 30 to 50 percent. If all three parties work together responsibly, the program should eliminate all debts within 3 to 5 years. The good news is that credit card companies are eager to renew their relationship with you when you complete the program. Utilities, rent, and cell phone services are other types of unsecured debt that could be part of a DMP.
You only make one payment per month for your debt repayment plan, instead of making numerous payments with numerous installments. The debt management plan is a powerful tool that leaves most users debt-free (and fully paid) in less than five years. Contact your bank and stop payments to the agency serving your debt management program as soon as you know that the agency has closed. Accounts included in a DMP may appear as paid through a debt management plan, but this should disappear once the account has been liquidated.
During your debt management program, Clearpoint certified counselors are available to help you with your problems and concerns. You can save some money with a debt settlement, but the fact that you haven't met your entire obligation will negatively affect your credit rating. If you send money to creditors every month, but it doesn't seem to dent your debt, a debt management plan can help.