Debt management plans (DMP) makes it more manageable for you to repay your loan through the arrangement of an affordable repayment plan based on your monthly household budget. While you are on a debt management plan, there will be a note on your credit report about your enrollment. However, the note will be removed once you have completed the plan. Not all creditors will agree to reduce the interest or waive the penalty charges but most of them will be agreeable.
There is only a small cost of enrolling in a debt management plan. Usually, you have to pay a one time setup and maintenance fees. A legitimate credit counseling organization will not charge fees such as application fee, and per creditor fee. After you get accepted into the debt management plan, you must make sure that you make repayment to the credit counseling organization on time. Not all kinds of debts can be paid through a DMP since it only deals with unsecured debts. You must make notes of which debts you are paying through the DMP as well as the ones that you still have to pay yourself every month.
There are many ways to look for an accredited DMP provider. You can ask friends who have joined a DMP plan before to provide recommendations. You can search the Yellow pages or do a search on the internet for a debt management provider. You can also get referrals from the National Debtline. Once you have a few DMP providers on your list, make sure you conduct a thorough research on each of them. You should visit the website of the DMP provider and check out the services it offers and the fees. The company must be licensed and authorized to provide the debt management services regardless of whether it is a charity or for profit organization.
The DMP provider must explain how the payment that you send in will be distributed to each of your creditors. Scam companies will hold the payment for a long time and get you in trouble for late payment. The company is responsible of disbursing the payment to your creditors on time and provide a way for you to track the payments. The DMP provider is to send you a statement copy to your mail box every month. If not, they may let you access the statement online. They must protect your personal information and not sell it to third party. You can read their policy to see how they protect your personal information.
You can see a few debt management providers and see which one is able to offer you with the lowest monthly payment. You have to make sure that you can meet the repayment requirement at the due date every month otherwise you should not enroll in it. Everything must be put in a written contract including the verbal promises. After the contract has been put into writing, you should review it and make sure they are exactly the terms that you have discussed with your provider.
