Debt Management Plans: Is a DMP Right For You?

Posted by: Sally S. | Dec 23,2007

Debt management plans (DMPs) can be a solid way to pay off your credit card debt. However, they can also mean more problems if you don’t proceed with caution. A DMP isn’t the same thing as credit counseling. It works in conjunction with credit debt counseling and it’s often a last resort for people who have tried unsuccessfully to pay down their credit card debt. Learn more about debt management plans:

 

You’ll deposit money monthly into your DMP. The credit counseling service you work with takes the money you deposit to pay for your bills and your credit card debt. You’ll know ahead of time how much money you need to deposit into your debt management plan and how much will be paid to each creditor. You’ll also have a good idea of how long it will take to pay off each debt.

 

Your creditors should work with you and your credit counselor to help you come up with a reasonable debt management plan. Your creditor will often lower your interest rates when they know you are working with a DMP. You may need to sign something stating that you will not use more credit while you are paying off your debt. This is a good-faith effort on your part that shows your creditors that you are serious about paying off your credit card debt.

 

You’ll still work closely with a credit debt counselor while you are working on a debt management plan. Your DMP helps you pay off your credit card debt, while a credit counseling service helps your learn how to budget your money for the future.

 

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