If So, How Many Payments Will I Have To Make Before My Creditors Will Do So

Category: Finance, Credit.

A DMP alone is not credit counseling, and DMPs are not for everyone.

Even if a DMP is appropriate for you, a reputable credit counseling organization still will help you create a budget and teach you money management skills. Consider signing on for one of these plans only after a certified credit counselor has spent time thoroughly reviewing your financial situation, and has offered you customized advice on managing your money. How a DMP Works. The organization uses your deposits to pay your unsecured debts, like credit card bills, and medical bills, student loans, according to a payment schedule the counselor develops with you and your creditors. You deposit money each month with the credit counseling organization. Your creditors may agree to lower your interest rates and waive certain fees, but check with all your creditors to be sure that they offer the concessions that a credit counseling organization describes to you.

Ask the credit counselor to estimate how long it will take for you to complete the plan. A successful DMP requires you to make regular, and could take, timely payments 48 months or longer to complete. You also may have to agree not to apply for- or use- any additional credit while you re participating in the plan. In addition to the questions already listed, here are some other important ones to ask if you re considering enrolling in a DMP. Is a DMP Right For You? Is a DMP the only option you can give me?

If an organization offers only DMPs, find another credit counseling organization that also will help you create a budget and teach you money management skills. Will you provide me with on- going budgeting advice, regardless of whether I enroll in a DMP? How does your DMP work? If a DMP is appropriate, sign up for one that allows all your creditors to be paid before your payment due dates and within the correct billing cycle. How will you make sure that all my creditors will be paid by the applicable due dates and in the correct billing cycle? How is the amount of my payment determined?

Don t sign up for a DMP if you can t afford the monthly payment. What if the amount is more than I can afford? How often can I get status reports on my accounts? Make sure that the organization you sign up with is willing to provide regular, detailed statements about your account. Can I get access to my accounts online or by phone? Can you get my creditors to lower or eliminate interest and finance charges, or waive late fees? What debts aren t included in the DMP?

If yes, contact your creditors to verify this, and ask them how long you have to be on the plan before the benefits kick in. This is important because you ll have to pay those bills on your own. Some creditors require a payment to the credit counselor before accepting you into a DMP. Do I have to make any payments to my creditors before they will accept the proposed payment plan? If a credit counselor tells you this is so, call your creditors to verify this information before you send money to the credit counseling agency. Beware of any organization that tells you it can remove accurate negative information from your credit report.

How will enrolling in a DMP affect my credit? Legally, it can t be done. Can you get my creditors to" re- age" my accounts- that is, to make my accounts current? Accurate negative information may stay on your credit report for up to seven years. If so, how many payments will I have to make before my creditors will do so? How to Make a DMP Work for You.

Even if your accounts are" re- aged, " negative information from past delinquencies or late payments will remain on your credit report. The following steps will help you benefit from a DMP, and avoid falling further into debt. If you stop making payments before your creditors have accepted you into a plan, you ll face late fees, and negative entries, penalties on your credit report. Continue to pay your bills until the plan has been approved by your creditors. Contact your creditors and confirm that they have accepted the proposed plan before you send any payments to the credit counseling organization for your DMP. Paying on time will help you avoid late fees and penalties. Make sure the organization s payment schedule allows your debts to be paid before they are due each month.

Call each of your creditors on the first of every month to make sure the agency has paid them on time. If your debt management plan depends on your creditors agreeing to lower or eliminate interest and finance charges, or waive late fees, make sure these concessions are reflected on your statements. Review monthly statements from your creditors to make sure they have received your payments.

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