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0:27 Debt Management Plans (DMP): how they work, timeline, cost
1:05 Debts you can include in a Debt Management Plan
1:19 Debts you can't include in a DMP
1:28 The Pros of Debt Management Plans
2:14 The Cons of DMPs
2:58 Who is a Debt Management Plan right for?
3:14 Who isn't a good fit for a DMP?
3:28 How to get a free consultation with a credit counselor to see if a DMP if right for you
Learn more about the factors involved in your credit score: [ Ссылка ]
🎥 ⏪ Video Recap:
Debt Management Plan Basics:
📋 A debt management plan, also called a “DMP,” is a structured debt-repayment program that consolidates all your qualifying debts so you only have to make a single monthly payment.
🔍 These plans are overseen by credit counselors, who can work with your creditors to potentially lower your interest rates and get fees waived to reduce your debt load.
⏳ Debt Management Plans typically last 3–5 years and usually have a one-time set-up fee and a recurring monthly fee. If you work with a nonprofit credit counselor, these fees will probably be lower than if you work with a for-profit debt management company.
💳 🏥 💸 What kinds of debts can be included in a Debt Management Plan?
Only certain types of debt can be included in a debt management plan. They’re usually limited to credit card debt, medical bills, and personal loans.
🚫 You can’t include car loans, mortgages, student loans, or tax debt in a debt management plan.
What are the pros of a DMP?
🔀 Streamlines your debt repayment.
🤝 Gives you access to support from a certified credit counselor who can also help with budgeting and other financial matters.
📉 Can save money over the long run via reduced interest rates and fee waivers.
😌 Reduces stress and provides relief from your creditors or debt collectors calling about the account.
What are the cons of a DMP?
❌ You usually have to close the accounts included in the plan, which can hurt your credit score in the short run since repayment history, the age of your credit accounts, and your credit utilization rate all play a role in your credit score.
📆 You need to be able to stick to the plan for the duration– usually 3-5 years. If you don’t make your monthly payment on time every month, your creditors may decide to bail on participating in the plan.
💰 There are some fees and costs involved.
Will a DMP work for you?
✅ If you're overwhelmed by credit card debt and/or medical bills, you want help coming up with a structured repayment plan without having to deal with each of your creditors directly, and you can commit to a multiyear solution, a DMP might be a good option for you.
⛔ If you don’t think you can commit to a 2-5 year plan or debt is mostly tied to big-ticket items like a mortgage or car loan or you’re already facing a debt lawsuit, a DMP might not be your best bet.
If you aren’t sure if a DMP is right for you, it doesn’t hurt to get a free consultation with a nonprofit credit counselor.
