Debt management plans (DMP) work to reduce your unsecured debt.
They can also reduce your interest rates with most types of
unsecured loans. To know what plan will work best for you,
identify your own needs first. Then look for a company that has
answers to your questions, reasonable rates, and a good record.
Identify Your Needs
Before you begin searching for a DMP, identify which accounts
you want handled. Interest rates on credit card accounts and
bills, such as medical, can be lowered with a DMP, but some
types of accounts, like mortgages and student loans, can't. DMP
can still handle payments for these accounts, but they will
charge you a fee for the service.
Make a list of the accounts you want handled. Include the
lenders' names and account balances. You can use this
information to get quotes from DMP companies. Do not give
account numbers or social security numbers until you have
researched the company and signed a contract.
Compare Pay Off Dates And Information
As with any service, you want to compare companies before
choosing one. To find a reputable plan, ask about pay off dates
and the process. Legitimate companies will be able to give you
specific closing dates for each account based on the balance and
creditor's name. All DMP receive the same low rate from
creditors, so pay off dates should be the same.
Companies that require money upfront or give vague dates should
be avoided. Such companies are either more interested in taking
your money or are not qualified.
Research Rates
With a list of reputable companies, begin researching rates to
find the best deal. Some companies have a small start up fee
with monthly charges of no more than 15%. Other companies are
subsidized in part, and may have a reduced fee, especially if
you have poor credit.
Companies that charge a large, partially refundable initial fee
are betting that you will drop out of the program before your
accounts are paid. They keep your money without providing
service. You should be cautious with such plans.
Check With Others
Another step to checking a DMP company is to look up their
record with the Better Business Bureau or your state government.
You can find records of past complaints online with these
agencies.
Taking the time to investigate DMP companies can save you money
and headaches later on.
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