Is a Debt Management Plan right for me right for me?
Debt
Management Plans are typically for someone who has Good credit and
has been making monthly on time payments but your struggling to
keep up with payments.
A Debt Management company
typically has pre-arranged with creditors offers that can help you
to get back on track.
A Pro is that this program
typically will get you a lower interest rate and get any late fees
waived with a new monthly payment that should be less than your
current monthly payment and allow you to start making a dent in
what you owe. The other pro is that this this should not affect
your credit because the DMP negotiates directly with your credit
card company and monthly payments are made each month to the
credit card company from the DMP Program.
A Con is
that the program only reduces the interest rate so you can
continue to make payments but you still have payments plus
interest so it may not reduce how many months you currently owe or
get you debt free in faster time frame. One of the largest Con to
this program is the strict rules some have like if you are late or
miss a payment they reserve the right remove you from the program,
add back those waived fees and potentially leave you in a worse
position then you originally started.
You have to understand most of the Non-Profit companies work on what is called “Fair Share”. So they get a small share of the monthly payments. They really do not negotiate on your behalf, the credit card companies already have pre-negotiated any deal you are offered and because they are a non-profit they can work with smaller fees.
Depending on what you are trying to achieve financially this could be a good option for you.
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