Debt Management

What is it?

A Debt Management Program (DMP) is a debt repayment program that is not a loan. A DMP allows you to consolidate all your unsecured, revolving debt (such as credit cards, hospital, clinic, & dental bills, store cards, personal loans, etc.) and combine them into one simple payment each month. This consolidated monthly payment is made to a third-party credit counseling agency, which negotiates repayment plans with the creditors in order to pay the debt in full over a shorter period of time. Each month, the agency disburses payments to each of your creditors in order to satisfy the agreed-upon terms. The common benefits of a DMP include reduced interest rates, reduced monthly payments and reduced timeframe for payoff. The goal of a DMP is to increase the amount of your payment going to principal rather than interest, ultimately resulting in a reduction in the payoff time period and the amount of money spent on interest. Family Life Credit Services (FLCS) has the ability to offer Debt Management Programs to consumers that would benefit from such a program.

Once you have enrolled on a Debt Management Program, you are then responsible to make a regular monthly payment to the credit counseling agency. The agency then disburses your payment directly to each creditor on a specific day each month based on the agreed-upon terms. As individual creditor accounts are paid off during the program, the total monthly payment amount made to the agency will remain the same, and the difference will be added to the monthly payment amount being disbursed to the creditor with the next highest interest rate, thereby paying off that account even faster (and so on). This is often referred to as the “Snowball Effect.” This process continues until all accounts are paid in full. The average length of a Debt Management Program is 3 to 5 years. While enrolled on a DMP, you are not able to apply for or take out any additional credit.

DMPs are not right for everyone and every situation. Using a DMP may hurt your credit rating or scores, as well as your ability to obtain new credit while on a DMP. If your financial problems stem from too much debt or your inability to repay your debts, we may be able to help. If a DMP results in a payment that fits your budget, will save you money, and will shorten the length of time you will need to pay off your debts, it could be a good fit for you. If the required DMP payment is not feasible given your budgetary constraints, or if the program will not save you money or shorten the time needed to pay your debts, we may suggest you look at other alternatives that would be a better fit.

The Process

Certified Counselors

All of our counselors are certified through an independent agency and are required to complete 20 continuing education hours every 2 years. Our counselors are highly compassionate and understand that during life’s journey, we often travel through rough patches. Although some of the rough patches are self-inflicted, other circumstances are completely out of our control. Many of our counselors have been in your shoes before and know what it’s like to have creditors calling. Through their experiences and education, you can be sure they will listen and do what they can to offer assistance, relief, and direction.

Client Handbook

Each client enrolling on a Debt Management Program will be given the FLCS Client Handbook. This handbook lays out in detail how our program works and outlines your rights and responsibilities.

Download a copy of the FLCS Client Handbook… 

The Role of Mandatory Education

We want you to succeed, both while on a DMP and into the future. Regardless of your situation, financial education is a vital tool to help you reach your goals and objectives. Family Life Credit Services offers financial education on subjects ranging from basic budgeting to building and rebuilding your credit. We currently offer 4 different education courses: Money and Faith in Motion©, Money in Motion©, CreditWise, and Credit When Credit Is Due©. Everyone that enrolls in the Debt Management Program is required to complete either the Money in Motion© or Money and Faith in Motion© course, and we have seen dramatically increased success in completing the Debt Management Program for those that have taken the course. These courses are also available for those not enrolling in the Debt Management Program for a small fee. We offer the CreditWise program in area high schools, universities, and job service centers, and we also offer the Credit When Credit Is Due© program in area homeless shelters and halfway houses. We’ve recently begun offering monthly Brown-Bag Lunch Financial Education Webinars which are open to our clients and the public at no charge.