Manage Your Debt Management Plan

Avoid financial organizations that push you into a debt management plan (DMP) as your only option before they spend a significant amount of time analyzing your financial situation.

In another debthelp.com article, we discuss the ins-and-outs of enrollment in a DMP. Here, we will talk about how to protect your interests once you decide that a DMP is your best course of action. A DMP easily can last up to 48 months in duration, so you should expect some major changes and challenges coming your way. To be successful, you must learn to manage your own DMP.

Credit Limits

Upon enrollment in a DMP, many creditors require participants either to limit or to totally avoid adding any new credit. Even if this is not the case, it is a very good idea to voluntarily and deliberately avoid adding any new credit while managing your DMP.

Coming of Age

Check periodically to make sure that your progress is making its way onto your credit report. Find out if any of your creditors have agreed to “re-age” your account(s), or mark an account as current after you enter a DMP or make a certain number of payments.

Keep to the Terms

If you know that you will miss a payment, contact your creditor immediately. Otherwise, a missed payment may cancel the DMP, and even may prohibit creditors from accepting a DMP in the future. A broken deal also could cause the old terms of your debt(s) to kick back in, including fees and interest penalties.

Manage the DMP Manager

As much as we wish it wasn’t so, there are dishonest DMP providers. Without generalizing, if you are hasty in choosing a DMP, your risk of being taken advantage of increases. There are some simple actions you can take to protect yourself.

Initially at least, do not just accept a statement from your provider that regular payments from your account are being paid to creditors. Rather, check with your creditors to make sure that they are receiving payments. Confirm that DMP administration fees as explained by your counselor are consistent with your bank statements. Verify all arrangements with both your counselor and your creditors.

Exiting the Plan?

There are instances in which a DMP either has not worked as intended, or circumstances in one’s life or in the counseling company have changed so much, that it is time to exit the plan. Remember that by quitting a DMP you may revive your old penalties, and you probably will have difficulty getting a new DMP. The best way to exit a DMP is to satisfy all of your debts.

The most common cause of a disintegrating plan is a debt counseling company going out of business. Disreputable counseling companies are being discovered constantly and forced to close, which may result in confusion and loss for a consumer who does not aggressively manage his or her DMP. To prevent this type of “surprise”, examine your monthly payment plan history to make sure that your creditors actually are being paid. If your company does go out of business, immediately stop payments to the debt counseling company by ending automatic deduction. Should this occur, pay your creditors personally.