Debt Management Program - How It Works

Debt management plan (DMP) is not a loan. In a typical plan, debt management businesses work directly with lenders on your behalf in order to reduce your interest rate and monthly payment on your unsecured debt. You have the flexibility to choose the payment option that is right for you. The main parties agree on an affordable monthly payment schedule which enables you to pay off your debt in about 3-to-5 year's.

Debt Consolidation/Debt Management Plan. If you have one or more credit cards that carry high balances, a Debt Management Plan may be the perfect solution for you. When you consolidate your bills into one monthly payment, it eliminates the variety of payments made on different credit cards. It is also a good solution when you are behind in your bills or facing the threat of collection calls.

Non Profit Debt Management Plans. The federal government has established non-profit credit counseling agencies to help consumers manage their money. These agencies have approved non-profit debt management plans that can help consumers negotiate lower interest rates, waived late fees, and lower minimum payments. The advantage to using these services is that they don't charge any fees until you are debt free.

Debt Management Program. When working with a credit counselor or credit counseling agency, your primary goal is to obtain a revised payment schedule, one that allows you to make one monthly payment, which is typically less than the cumulative amount of your individual credit card payments. You will also work with your creditors to reduce interest rates, re-evaluate your debt management plan, and reduce collection calls.

Debt Counseling Plan. When you are working with credit counselling agencies, you will also work with them to set up a debt management plan. Debt counselors will help you create an Individual Voluntary Arrangement (IVA). With an IVA, you and your creditors agree to a repayment plan to repay your creditors over a specified period of time. Most of the time, this involves extending your current monthly payments for three to five years. Your credit counselors will assist you in negotiating the terms of your IVA with your creditors, if necessary.

Payment Plan. Some debt counselors or credit card debt counselors also work with you to develop a payment plan to repay your credit card debt faster. Usually, these payment plans include an interest-free period, in which you pay no interest charges on the balance outstanding. You usually have a deadline for the end of the interest free period, which is met if you pay your bill before the grace period expires.

Debt Management Plan (DMP). Debt management plans allow you to consolidate all of your bills into one bill. You and your credit counselors will discuss how to combine your individual bills into one account, with monthly payments to be made to that account. Credit counsellors can assist you in budgeting your money to enable you to make multiple payments to the DMP company. Debt counsellors’ usually recommend that their clients make extra payments toward paying off their bills in order to get out of debt as quickly as possible.

Debt Management Program can help you achieve the fastest possible repayment of your unsecured debt by negotiating with your creditors. Once your creditors agree to a settlement, you will pay your settlement amount in full and be required to make one low monthly payment. This will ensure that your credit score does not suffer any damage. A credit score can easily recover by making single, on-time payments.

Debt Settlement. If you have several high interest loans, you can benefit from debt management programs. The debt relief counsellor will contact your creditors and negotiate lower interest rates and a payment that are close to the amount you still owe. Your creditors will then accept the new terms, and your debt will be paid in full.

Debt Consolidation. Debt consolidation enables you to combine all your loans into one monthly payment. You will either choose a lower interest rate to have your loan interest rates reduced or you may choose to bundle your bills under one lender. This can reduce the total amount due and make it easier for you to pay back your loans. Debt consolidation programs are designed for students and people with a low credit score who cannot afford to make several high interest payments each month.

Debt Management Program allows you to consolidate your personal and medical bills. You will also make lower monthly payments and get rid of late fees and penalties. If you are behind on your payments, a debt management plan can help. For more information or to speak with a counselor, call a toll-free hotline that is available from the Debt Management Program counselors.