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Debt management plan may help consumers deal with money problems
11/16/2009
When trying to pay off debt, one of the options a consumer may consider is a debt management plan.
Through a debt management plan, a consumer works with a consumer credit counseling service. According to the Federal Trade Commission, consumers give the counseling service money, which it then uses to pay off debt for the person.
The advantage of a DMP is that a consumer credit counseling agency may be able to negotiate with lenders to get lower rates. However, the FTC notes there are some things consumers need to do if they are in such a plan. They need to make sure to make payments on time, and they should check their monthly statements in order to ensure their lenders are getting the money.
"You need to be aware that if payments to your DMP and creditors are not made on time, you could lose the progress you’ve made on paying down your debt, or the benefits of being in a DMP, including lower interest rates and fee waivers," the FTC's website said.
Along with setting up a DMP, consumer credit counseling agencies can help consumers in setting up a monthly budget. Doing so would involve examining a person's income and expenses and then determining where the consumers can find some savings, which may include cutting back on unnecessary costs.
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