If you are struggling with credit card debt, then you might be able to benefit from a debt management plan or DMP. A debt management plan can help you particularly if you are behind on your bills, you have high-interest rates on your credit cards, or you are having trouble making your monthly payments.
How does it work?
When you enroll in a debt management plan, a credit counselor will work with your creditors to get you benefits that would be difficult for you to get on your own. Some of these benefits include:
- Lower interest rates on your credit cards and store cards
- Eliminated late fees
- Eliminated over the limit fees
- Re-age your accounts, bringing you back to current status
- Consolidate your payments into one low monthly payment
- Pay all of your debt off much faster, usually between 3 and 5 years
If you are struggling at all with your bills, it is important to seek help immediately. The sooner you do something about your situation, the more options you might have to get out of debt.
A debt management plan is a great alternative to bankruptcy. With a DMP, you can actually improve your credit over the long term by getting your accounts up to date and paid off. The plan can help you get out of debt and become free from personal debt without many of the negative consequences of bankruptcy.
However, a DMP is not necessarily for everyone. If you have plenty of money to pay your bills and are simply looking for a lower interest rate or lower monthly payment, then you should probably look at other options for paying off your debt. Your creditors likely will not approve you for benefits if they feel you do not show proper financial need. If all of your debts are collection accounts, then a DMP may not be for you either.
If you need help with your debt and would like a plan to become debt free, then you should speak with a credit counselor. The counselor can take a look at your debts, budget, and overall financial picture to help you determine whether or not you would benefit from a debt management plan.