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Debt management plan is a plan designed to make paying back the debt more manageable and affordable for you. You can join a DMP program if you feel that you are unable to cope with your debt anymore or you have already fallen behind in your payment. The DMP provider will negotiate with the creditor on your behalf to get him to reduce the interest charges. If you continue to make repayment to your creditor in the traditional way, you will find that your balance is not reducing as you make payment because all the payment you make will go towards the interest fees.

The DMP provider will get your creditor to cancel all the fees such as late fees that are charged to your account. He will review all your finance including all sources of revenues as well as outgoing expenses. After reviewing your expenses, they will create a plan with a suitable monthly payment that you can afford realistically. When you join a DMP, you will be agreeing not to open new credit cards. By signing the agreement, you also agree that you won’t sign up for any new loan. You will be declined if you try to apply for new credit card or loan while in the debt management program. Your creditor will not allow you to get anymore credit card or new loan. This is because he wants you to quickly pay off the loan after having lower your interest rate and eliminate the fees.

You can decide how many credit card accounts you want to put in the DMP program. You can keep one of your credit cards and get the remaining credit cards into the program to leverage your credit score. The card that you choose to leave out of the program should have a low balance and that you must be able to cope with the repayment. Normally, it takes 4 – 5 years to pay off a DMP plan. You will only be making a single repayment to the DMP provider who will then distribute the funds to the creditors. There is a fee that you will get charged for the debt management services. The fee is about 15% of the total debt amount that you owe your credit card company. If you want to learn how debt management program works, please click here.

It is important to choose a company that is a member of a respected organization as this can give you an assurance that they are a legit company. You should avoid dealing with a DMP firm that ask you for sensitive information such as credit card number on the phone. Once you have completed the DMP program, you can apply for new credit card and loan again. The same credit card companies where you have paid off the credit cards may send you offers. By joining the DMP program, you will be able to learn how to manage your finance more responsibly. If you do apply for new cards again, make sure you pay back on time so that you won’t make the same mistake and fall behind on payment again.