Pay Off Debt With DMP
During my stint as a certified credit counselor, I learned that for most situations the best way to pay off unsecured debt like credit cards is a Debt Management Plan, or DMP.
DMPs are set up through a credit counseling agency. You can find an agency through the National Foundation for Credit Counseling. First, read the Federal Trade Commission’s “Choosing a Credit Counselor”.
Your counseling appointment should be free. If an agency charges a fee for counseling alone, choose another.
During your appointment the counselor will help you put together your household income & expenses. He or she will collect information on all of your debts. With this information, the counselor will be able to estimate the lower monthly payments and interest rates available to you through a DMP. Even if you’ve tried and failed to get your creditors to reduce your minimum payments and interest rate, the same creditors will likely accept a proposal from a reputable credit counseling agency that your account be put in DMP status with a lower payment and APR.
If the single monthly DMP payment estimated by the counselor won’t fit in your budget, he or she will brainstorm how you might cut expenses or increase income so you can qualify for the DMP.
- Agency works with creditors → less stress
- Lower APRs → pay off debt with fewer dollars
- Lower total monthly payment → more affordable
- One constant payment due the same day each month → eases planning
- Your creditors are part of the plan → collection calls and letters stop
- Most accounts are re-aged → you’re no longer past due
- Low fees
- Free ongoing counseling available
So go ahead, make the appointment! It’ll only hurt a little bit.