Debt Management

If you have the ability to continue your monthly payments and wish to stay current, a Debt Management Plan may be a good fit.

Debt Management is a program in which a Debt Management company works with creditors on your behalf to reduce your monthly payment and interest rates on your debt and waive or reduce any penalties. The parties agree on an affordable payment schedule that allows 3-to-5 years to pay off your debt, generally with a reduced interest rate. Debt management has its own risks and rewards and may require specific licensing. When you find yourself in debt, knowledge is critical to understand your options and make an informed decision as to which program or service is the most appropriate for your specific situation. Below this video, you will find resources and OCCAM Certified Debt Management professionals that will be happy to answer any questions you have if you feel this option is right for your situation.

According to Wikipedia, a debt management plan (DMP) is a formal agreement between a debtor and a creditor that addresses the terms of an outstanding debt.This commonly refers to a personal finance process of individuals addressing high consumer debt. Debt management plans help reduce outstanding, unsecured debts over time to help the debtor regain control of finances. The process can secure a lower overall interest rate, longer repayment terms, or an overall reduction in the debt itself. DMPs for consumers are often negotiated by a credit counseling agency on behalf of the debtor. Credit counseling agencies often address the debt by working with the debtor to set a budget based on their regular income and expenditures that will then include one regular bill payment that is allocated across the creditor(s). Agencies will negotiate on behalf of the debtor to lower payments and interest rates with creditors. Some of the agencies are non-profits that charge no or non-fee rates, while others can be for-profit and include high fees. The effect on the debtor’s overall credit score will vary.

In the United States, credit counseling agencies are loosely regulated by the Federal Trade Commission (FTC), the nation’s consumer protection agency, which can sue companies that have deceived consumers about the cost, nature, or benefits of their services. Different states may regulate DMPs individually and attorneys general are empowered to protect state citizens from fraud.

The FTC (Federal Trade Commission) had this to say about DMPs:

“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. Don’t sign up for one of these plans unless and until 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. It 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 it’s a good idea to 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; it could take 48 months or more to complete your DMP. 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.”

Download the FTC’s Guidance to Consumers Regarding DMPs (PDF from FTC Website-SAFE)

Knowing your options and the details about the services you are seeking is critical to your success. When you are in debt, life can become overwhelming. There are a great many options available to you to address the challenge, but like tools, using the right one is important. There are many companies out there that will offer you their solution, but if they only have one tool in their toolbox, you will likely be sold into that service. At OCCAM, our members must provide a quality assesment of your unique situation and offer you access to ALL the facts and the tools available, even if they don’t offer it themselves. It’s the right thing to do. A good company will be more interested in finding you a solution to your problem than they are in getting you enrolled into their specific service. Not every tool is right for the job. It is your  responsibility to know what these options are and to understand the benefits and risks of each option. OCCAM Members are all thoroughly vetted and audited for compliance prior to being allowed membership, so using an OCCAM Certified Company is the safest way to engage these companies. If you have a challenge with an OCCAM Member or their services, we will be right by your side to make sure it gets resolved to YOUR satisfaction and make sure you get the help you need.

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