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What the Federal Trade Commission
says about: Debt Management Plans
Debt Management Plans: If your financial problems stem from too much debt or your inability to repay your debts, a credit counseling agency may recommend that you enroll in a debt management plan (DMP). A DMP alone is not credit counseling, and DMPs are not for everyone. You should sign up 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. Even if a DMP is appropriate for you, a reputable credit counseling organization still can help you create a budget and teach you money management skills.
In a DMP, you deposit money each month with the credit counseling organization, which uses your deposits to pay your unsecured debts, like your credit card bills, student loans, and medical bills, according to a payment schedule the counselor develops with you and your creditors. Your creditors may agree to lower your interest rates or waive certain fees, but check with all your creditors to be sure they offer the concessions that a credit counseling organization describes to you. A successful DMP requires you to make regular, timely payments, and could take 48 months or more to complete. Ask the credit counselor to estimate how long it will take for you to complete the plan. You may have to agree not to apply for — or use — any additional credit while you’re participating in the plan. |
Lawgistix’s Opinion
on Debt Management Plans
While it is logical that a DMP will work, history tells us otherwise. These plans, properly administered are very rigid and insist on reducing a consumer’s expenses to a bare minimum.
For example, expect that they will insist that you only have basic cable, or exactly $15 for entertainment for the whole month. Your groceries may not exceed $65, your gas $30, and so forth.
These plans are extremely rigid and require the utmost discipline. But once again, the success rate of DMP’s are reported to be very low. Most people simple can’t adjust to cutting every expense to the penny for years on end.
In many circumstances, the payment relief is more substantial than credit counseling, but still not enough for the consumer to afford.
For more information about Debt Management Plans compared to Lawgistix Debt Settlement please call us at
1.800.535.5179 .
"I have enjoyed being involved with the settlement process. I know what happens and I control it. It gives me a peace of mind."
-Bob M.
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