What’s a Debt Management Program? About one third of the NFCC’s clients get referred to a DMP after the initial credit counselor consultation. You’re here mainly because your monthly debt obligations exceed your monthly take-home pay, and because the counselor estimates it will take you longer than a year to repay your debt. Through the program you pay the credit counseling agency a fixed amount of money each month until you are debt-free. Your debt is repaid 100% and usually takes two to four years to complete, for $10 to $15 a month. Make sure to get the costs in writing. Sometimes fees will be waived for extreme hardship.
The first step in a DMP is kind of a repeat of the initial consultation: going over your income streams, your budget and then making suggestions. Then you prioritize your payments. The first priority is paying for all your living expenses. The second is anything with major collateral, like your car loan. The counselor then approaches your creditors to try to negotiate lower monthly payments, lower interest charges, no fees, etc.
Be Proactive. Contact all of your creditors, from your banks to your student loan collection agency to medical offices. Make sure that the credit counseling agency has, in fact, been in touch with them and that they are in agreement with the new terms negotiated by the credit counseling agency. Then, thoroughly check your monthly statements to verify your payments are going through.
Should I File Chapter 13 Bankruptcy? If a credit counseling agency believes you can’t pay off your debt yourself in the next five years, you may likely be advised to look closely at Ch. 13 bankruptcy. This site has all the ins and outs.
