Are you falling further behind on your credit card bills every month?
They can even help you improve your credit score.
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Were here to answer your questions.
What is a debt management plan?
A debt management plan, or DMP, is a method for consolidating debt.
Did you know?
DMPs typically take three to five years to complete.
Is a debt management plan a loan?
A DMP is not a consolidation loan.
How do I know if I need a debt management plan?
How do I sign up for one?
Avoid any organization that pressures you into a debt management plan before fully considering your financial situation.
The initial consultation should be free.
Youll also need your employment information.
How much do debt management plans cost?
Setup fees are typically around $50, while monthly fees range from $25 to $75.
Your fees should be incorporated into the single monthly payment you make to the credit counselor.
Waivers may be available based on your financial situation.
If there are fees, shouldnt I just do this myself and save the money?
Can I keep my credit cards?
And you wont be able to open new credit card accounts until you reach the end of the plan.
Does a debt management plan affect my credit score?
Can I include other debts, like student loans, in my debt management plan?
What if my credit card debt is in collections?
If the collection agents continue to harass you, contact your counselor.
Wouldnt it be easier to declare bankruptcy?
After the initial signup, what kind of communication will I have with your counselor and/or creditors?
However, while youre on the DMP, you will continue to receive account statements from your creditors.
What happens if you miss payments or quit a DMP before you finish paying off your debt?
If youre not making those agreed-upon payments, youll face some serious financial consequences.
If you pay off the debt early, can you stop the plan (and fees)?
If you could pay off your debts earlier than the plans scheduled timeline, congrats!
Just be sure you remember to pay the remaining balance including anyresidual intereston the account.
Are debt management plans the same as whats advertised on TV?
The late-night TV ads for debt settlement that promise to negotiate away your debt arent promoting debt management plans.
But its a roll of the dice; they are not always successful in doing that.
The company then attempts to use the non-payment as leverage to force your creditors to write off your debt.
And if in the end those negotiations arent successful, where do you think that leaves you?
Tiffany Wendeln Connors is a staff writer/editor at The Penny Hoarder.
Readher bio and other work here, then catch her on Twitter @TiffanyWendeln.
Probably not as good as youd like.
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