Debt consolidating programs
Finding out you can’t too late in the game could have consequences for your plan and your credit score.
Whether you opt for a DMP or debt settlement, it’s important to do some homework before you choose a company to work with. If your credit counselor can’t directly place you in a DMP and sends you to another company, check the reviews before you enroll.
In the meantime, a lot is going on with your account: Finally, if the settlement does go through, it’ll be considered taxable income. Another option they might present you with is to enroll in a debt management plan (DMP).
A DMP involves paying someone else to help you manage your debt.
At first glance, this phrase can sound so magical — a tool that will put all your debt in one place and make it suddenly seem manageable.
But do these programs always do what you think they will? Here’s the one thing you need to know about debt consolidation programs before you decide if this is the right path for you.
It can also help to see if the company is part of a larger organization, such as the National Foundation for Credit Counseling (NFCC).
Lower interest rates mean more of your money can go to the balance and help you get out of debt faster.
Typical usage of the word “debt consolidation” refers to the act of taking out a loan to pay off one or more debt.
This can also be done with a balance transfer credit card.
And on that note, be aware that if you miss even one payment yourself, you could be kicked off of your DMP.
So before you sign up, evaluate the affordability of the entirety of your plan and make sure you can handle it.Here’s a warning from the FTC: “Be aware that ‘non-profit’ status doesn’t guarantee that services are free, affordable, or even legitimate.