What's a Debt Management Program - And How Can it Help Me?

If you’re in debt, chances are you’ve already done some research into ways to pay off your debts. You may have heard the terms “debt counseling” or “DMP” and wondered what they mean. Here’s an overview of debt counseling and debt management programs and how they can help turn your debt around.

Consumer credit counseling agencies, like InCharge Debt Solutions, offer Debt Management Programs (DMPs) that help you consolidate and pay off your debts. If they determine that a Debt Management Program is the best solution for your situation, they negotiate with your creditors on your behalf to obtain lower payments, may have your interest rates reduced and/or your late and over-limit fees waived. Once an affordable payment plan has been established, you make one monthly payment to the credit counseling agency. The agency then disburses payments directly to your creditors. Your debt payment schedule is set up in the beginning, so you know how long it will take for you to pay off all of your debts.

An important part of participating in a Debt Management Program is learning. A good credit counseling agency will provide you with valuable, ongoing education throughout the length of your DMP and afterwards. Through one-on-one counseling over the phone, educational newsletters and programs, a credit counseling organization can give you the knowledge and tools you need to keep from falling back into debt problems once your DMP is completed.

Participation in a debt management program does not impact your credit score. However, each creditor’s policy varies, and some creditors do note participation in a DMP on clients’ credit reports and may view it negatively if one attempts to open additional credit. At InCharge Debt Solutions, we let our clients know from the start that nothing we do directly impacts their credit rating. We do not report client participation to credit bureaus. And by making payments promptly, most people actually improve their credit rating while on a DMP.

While they are not the solution for everyone, DMPs can offer great benefits for the right candidates, including:

• Reduced monthly payments and interest rates
• Waived late and over-the-limit fees
• Stopping collection calls
• The convenience of one monthly payment
• Reaging your account to bring it current

Debt management programs can be a good alternative for consumers considering bankruptcy—call us today and find out if they are the right solution for you.