Working With Consumer Credit Counseling
There are numerous organizations that advertise consumer credit counseling through a program often known as Debt Management Plan (DMP).
This is how it works: If you enroll with this DMP, each month you deposit some money with them and the organization will use the deposited money to pay your credit card bills, student loans, medical bills, or other unsecured debts according to a payment schedule they have worked out with you and your creditors.
The advantage of this DMP program with the expertise of a trained negotiator, your creditors may agree to lower interest rates and waived away certain fees that had impounded on the debt.
You should be aware that by enrolling into such DMP program, your payment must always be on time as promised. If you are late in your payment, all the privileges assoiciated with the negotiations will be lost. This mean the debt will become larger and will take a longer time to settle especially with the accumulated late fees and penalties imposed on it.
Although these organizations advertised that they can reduce your interest rates, it is usually for up to 6 to 9 months and then the rates will raised back to the maximum permissable by the law.
The advantage of enrollment with this Debt management program is that a typical debt amount is expected to paid off faster usually about 7 years instead of 30-40 years with a little adverse impact on your credit score.
When a you sign up for a DMP program, the credit counselling company may put a negative mark on your credit report to indicate that you had enrolled for a Debt Management assistance. This will remain on the credit report for 7 years after the last payment with the credit counseling service.
Credit Counseling can help if the interest rate and the impounded fees is causing you a problem. If the accumulated debt is too much and you are failing behind in your payments, you should look into another alternative of paying off your debt. That is through a program called the Debt Settlement Program.
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