Debt Management Program Guide
A Debt Management Program (DMP) is often recommended to consumers struggling to pay off their debts. One of the options of consumer credit counseling is the service of a DMP to centralize control and streamline the payment of a consumer’s debts. This is normally managed by an independent third-party for a nominal fee. Consumer credit counseling can offer a consumer various additional benefits as well. For those struggling to manage credit (excessive debt), a DMP can help them get their life back on track and improve their future life.
Here are an overview of a debt management program and potential benefits:
What Is A Debt Management Program?
Consumer credit counseling is a process by a third-party agency providing consumers information, guidance and support on budgeting, credit, money and debt management. A Debt Management Program is an option available as part of consumer credit counseling. The goal of consumer credit counseling is to help you improve your financial situation by avoiding excessive debt that you cannot comfortably maintain. If you find yourself with excess debt, you will likely receive a recommendation to enter into a DMP.
Here are the basic things to know about a Debt Management Program:
- Generally Offered By Non-Profit (Minimal Cost) Organizations.
- No Eligibility Requirements Other Than Needing Debt Relief.
- Generally The Option Of Last Resort To Improve Your Debt Situation.
- You Make Monthly Deposits To The Credit Counseling Agency.
- The Credit Counseling Agency Uses Your Deposits To Pay Your Creditors Monthly.
- Normally There Is A Set Up Fee and Monthly Fee For Administration.
Debt Management Program Is Simple
Yes it really is. If you can manage a checkbook and organize the payment schedule for your bills (debts), you don’t need a third-party agency to do this for you. Plus you will need to pay for this service, even if it is a nominal fee.
However, there is value in simplifying your financial life, if it is not working well for you right now. It bears repeating: to reduce your debt, avoid late payment penalties and improve your credit, your bills need to be consistently paid on time. It is simple, but perhaps not for you.
If you are seeking consumer credit counseling, something is amiss. Managing your priorities? Forgetting stuff that is not fun to do? Whatever the reason a Debt Management Program may be what you need to get you to a better financial place.
Here are the basic benefits if you decide on pursuing a Debt Management Program.
- Reduce And Stop Debt Collector Calls.
- Potentially Lower Debt Interest Rates.
- Lower Monthly Payments.
- Waiver Of Late And Over Limit Creditor Fees
- Potential Paying Off Your Debts Faster.
- Improve Your Credit Score By Making On-Time Payments & Improving Your Credit Utilization
Debt Management Program Reality
A Debt Management Program will help those consumers with difficulty consistently paying their creditors by following a structured centralized plan. The DMP takes about three years to complete and assumes that your financial situation does not adversely change (e.g., loss of a job, sickness or divorce). Often this results in needing additional credit and adding to your existing debt obligations. If this does happen you can review consumer debt consolidation options as an alternative solution.
Simply put, when you consider the consumer credit counseling option of a Debt Management Program you know you have a problem with managing credit. The other side of the coin is you have a problem paying your debts. You may not have a clear understanding as to how you got there, but you know you need to make a change.
To do that, you have to change the way you view your life and the need for debt. But a Debt Management Program is a good first step.
An overview of the consumer credit counseling option of Debt Management Program is presented. This includes 1) What Is A Debt Management Program?; 2) Is It Simple Process?; 3) What Are The Benefits?; and 4) What Is The Reality Of A Debt Management Program?
Have a comment or question? We welcome your feedback, so just jot it below. And, if you know someone that might benefit from this article, please send it along via your favorite social media channel. For additional information on how to regain control of your financial situation, please Contact Us for a free, no obligation consultation.