Basically, enrolling in a DMP means that rather than writing checks to multiple debtors you instead write a single check to your DMP company, who then gives the money to the creditor. The advantage of this program is that your creditors may be willing to settle for less than you owe. It sounds nice, right? And sometimes it is a good idea but for many people it is an extreme measure that isn’t necessary. If you’re thinking of enrolling in a DMP, consider the following issues:
o Is DMP the only service you can offer me?
o The company should also provide budgeting and money management training.
o How do you determine the amount of my payment?
o If you can’t afford the monthly payment, don’t enroll.
o Can you get my creditors to waive late fees and lower interest rates?
o Confirm this information with your creditors.
o What debts are not included in the DMP?
o Remember that you will be responsible for making those payments.
o How can I check the status of my repayment?
o How will enrollment in this program affect my credit?
o If the company tells you that they can remove negative (but accurate) information from your credit history, consider that a red flag as it would be highly illegal¦and probably not possible.
Beware of credit repair companies who:
o Guarantee that getting out of debt will be easy or fast.
o It can take 30-60 months to complete a legitimate DMP. And if it was easy you wouldn’t need help¦
o Are reluctant to provide you with their contact information.
o Demand to know your account numbers before discussing service.
o Insist that you make an immediate decision.
o Getting into debt probably didn’t happen overnight and neither will getting out- you should take time to investigate all of your options.
I generally caution people to be extra careful when anyone calls you and offers to help. Finding a reputable debt counselor takes time and research on your part.
As always, check out any prospective company with the Better Business Bureau.