How to Make a Debt Management Program Work
Most debt management programs (DMPs) were created in response to the new bankruptcy laws in 2005. Since then, many DMPs have gone out of business due to poor management or fraudulent practices. The following steps can help you choose a program and make the most of it.
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Instructions
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Choose a well-established, reputable debt management program (DMP). Check with the Better Business Bureau and the State Attorney General's Office of Consumer Affairs for reports regarding the debt management service.
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Work closely with the Financial Counselor to create a realistic budget and attainable goals. Work only with available income and funds without predicting windfalls, tax refunds, etc.
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Insist on a detailed, written agreement that contains all information, promises and guarantees as well as a list of creditors and debts. Refuse any agreement that includes verbal assurances. Get it in writing.
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Contact all creditors to make sure that each one agrees to the DMP. Understand that no creditor is obligated to accept a proposed DMP and may refuse or make a counter-offer.
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Maintain contact with creditors to assure that payments are being posted regularly and that the account is current. Understand that, despite a DMP, the personal obligation to the creditors is intact.
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Verify adjusted interest rates with creditors and make sure that late fees and over-the-credit-limit charges have stopped. Review the monthly statements carefully. Call the creditor first and then call the Financial Counselor with any questions.
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Commit to on-time payments to the DMP. Set up an auto-draft program through a checking account to assure timeliness. Manage personal funds closely and stick to the budget created with the Financial counselor.
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