Debt Management Program
Debt Management Program FAQs
What is a Debt Management Program or Debt Management Plan (DMP)?
A Debt Management Plan (DMP) or debt management Program is typically offered by a Credit Counseling agency to assist those who are struggling with their finances and have accumulated significant unsecured debt. Our aim is to help you regain control of your financial life. Here’s what will take place in a DMP.
1.Free initial credit counseling session – Collect all your outstanding credit card statements, and monthly bills, and we work with you to create a manageable budget.
2.Create a proposal to creditors – We assess your credit card debts, and other unsecured debts, and create a proposal to send to your creditors. Creditors have been known to lower your monthly interest rates, accept a lower monthly payment, or re-age your accounts so they are current, instead of in arrears.
Note: The goal of a debt management plan is to get you out of debt in the shortest period of time, without going through bankruptcy or debt settlement, both of which are detrimental to your credit score.
3.Keep up with your accounts – Once a proposal is accepted, we set up an account for you, where you transfer funds directly to us via EFT, electronic funds transfer from your checking account. Each month, we make sure your bills are paid on time, and keep you appraised of your status with a monthly statement of your account.
How do Debt Management Programs work?
Debt management Programs are a superior alternative to options such as bankruptcy or debt settlement. DMP’s work to get you out of debt in the fastest time possible, typically under five years. Enrolling in a DMP offers the advantage of considering your living expenses and requirements, unlike the alternative. With a DMP, you can manage your budget to ensure comfortable living conditions, while also working towards the long-term goal of becoming debt-free.
Do Debt Management Programs work?
Are you ready to achieve financial freedom? It starts with your commitment to a Debt Management Program (DMP). Just like losing weight, any diet or exercise program can work if you’re committed and stick to the plan. The same is true for a DMP.
We make it easy for you by handling the details and ensuring your payments are made on time. You can reach us by phone if you need assistance, so you can focus on living your life while we take care of the rest. But remember, the success of the debt program ultimately relies on your dedication to achieving your financial goals. Let’s work together towards your bright and debt-free future!”
Which Is Better, Debt Consolidation or Debt Management?
Debt Management: A Debt Management Program is a type of Debt Consolidation Plan that doesn’t require a loan. It allows you to make a single monthly payment, which is often lower than your current payments to creditors. By enrolling in a Debt Management Plan, you can simplify your payments without taking out additional loans.
Debt Consolidation: Debt consolidation means merging multiple debts, especially those with high interest rates like credit cards, into a single payment. It can help if you can get a lower interest rate, enabling you to reduce your overall debt faster and simplify your payments.
If unsecured debts are causing you stress, and bill collectors are calling you, your credit score is already low. With a low credit score, you cannot get a loan at a reasonable interest rate. We do not recommend taking out a loan to pay off bills.
With a Debt management plan from ACCC, you can send in one monthly payment, usually lower than the combined current payments to your creditors. We make sure they are paid, and on time. You are essentially consolidating your debt without a loan.
Where do I find credible Debt Management services?
If you’re looking for the best debt management service, here are some things to consider:
- Look for agencies with a long track record of success.
- Consider non-profit organizations that prioritize client service.
- Check if the organization is a member of a national accreditation association, like the NFCC.
- Ensure that the credit counselors are certified and accredited professionals.
At ACCC, we meet all these criteria. We have been providing credit counseling services for over 25 years, all our counselors are accredited professionals, and we are proud members of the NFCC.
Can I keep some of my credit card accounts open during a debt management program?
In most cases, you are supposed to stop using all of your credit cards. In some cases, you are allowed to keep one card “out of the program” for emergencies.
Why Is Debt Management education necessary?
It’s important to learn about debt management because it helps you manage your money better and avoid getting into debt. By learning about things like budgeting, saving, and borrowing responsibly, you can make better choices with your money. Debt management education also shows you what to do if you’re having money problems and helps you find the best solutions for your situation.
At ACCC, we don’t just help you get rid of your debt, we also provide you with a wealth of knowledge to help you manage your money better. Our debt management program includes access to educational materials and personalized support from experts who can guide you through all aspects of financial management. As you work towards becoming debt-free, you’ll also gain valuable insights that can help you avoid future financial challenges.
Who should use Debt Management?
If you’re struggling with a significant amount of debt but can still make your monthly payments, a debt management plan may be the best option for you. However, it’s important to ensure that your debt is eligible for the plan before proceeding.
If you don’t take care of your unsecured debts in a timely manner, it can have lasting effects on your credit score. However, a debt management plan can help ease this by ensuring that you make regular payments.
Your credit score is crucial because it determines your creditworthiness and the interest rates you’ll be charged for future loans. If your credit score is low, it may be difficult to secure loans with affordable interest rates or get an apartment. Landlords, bankers, and others can access your credit score to determine how creditworthy you are.
Will a Debt Management Program also help me with my expenses?
A debt management program helps you understand your expenses better. It creates a plan that tells you exactly how much you need to pay each month to get out of debt. This knowledge helps you prioritize your other expenses. You can also choose your payment date to work around your other bills.
Additionally, a debt management plan often requires a lower monthly payment than you would make on your own. This is because credit card companies may lower your interest rate when you enroll in a DMP.
Should I choose a Debt Management Program or bankruptcy?
Bankruptcy: Bankruptcy is a legal process that happens in federal court when a person can’t pay their debts. The court may sell their assets to pay off the debts, and the debtor is no longer responsible for the remaining balance. Chapter 7 bankruptcy involves selling off assets, while Chapter 13 bankruptcy involves reorganizing debt. If you have questions about bankruptcy, it’s best to talk to a licensed bankruptcy attorney.
Debt Management Program: A debt management program is a service that helps people manage their debts more effectively. It typically involves working with a credit counseling agency to create a personalized plan for repaying debt. The agency negotiates with creditors to reduce interest rates and monthly payments and consolidates multiple debts into a single monthly payment. The goal is to help people pay off their debts faster and more efficiently, while also developing better financial habits for the future.
Therefore, bankruptcy should only be considered as a final option. It can cause long-term damage to your credit score and have emotional effects. A bankruptcy stays on your record for up to 10 years and may make it difficult to get certain loans or result in higher interest rates.
Could a Debt Management Program still hurt my credit?
A debt management plan is not the same as debt settlement or consolidation. That means it looks different on your credit report. Creditors may report that you’re in financial counseling and still track your payments. But that won’t hurt your credit score.
With a DMP, you will pay off your debt completely. Your credit report will show that you did this using a credit counseling agency and you will not have a negative impact on your credit score.
Your alternatives to a debt management program have a more severe impact on your credit score. Options such as bankruptcy should be a final resort. Currently, bankruptcy candidates must go through a credit counseling and debtor education program to be eligible for bankruptcy. The rules and stipulations for bankruptcy have changed dramatically over the past few years, and many individuals who may have been considered eligible for bankruptcy are no longer eligible.
Do I have to complete a “Debt Management Counseling session"?
Yes. There is an education component to the program, but it is very helpful to your situation, and fairly easy to complete satisfactorily. You will learn many things that you need to know about credit, money and finance.
Is there a fee for a Debt Management Program?
Here is the fee break-down for your debt management program with ACCC
- Your initial budget counseling session is done free of charge. This is where your certified counselor will take you through all the elements of your budget to figure out your total financial picture.
- Once you are enrolled, there is a one-time fee of $39* for enrollment into the debt management program. The enrollment fee may be waived or reduced depending on your state’s regulations or financial hardship.
- There is also a monthly maintenance fee of $7 per account with a minimum of $7* and a maximum of $70. The monthly maintenance fee may be waived or reduced depending on your state’s regulations or financial hardship.
As a non-profit agency, the fees help to defray the cost of providing services to the many enrolled individuals. ACCC prides itself on having the lowest effective fee structure in the industry. (Please note that fees are subjected to change)