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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.More common questions about Debt Management…
Get Started Now – Request a Consultation
Contact a credit counselor by filling out an application (Link to application page) or by calling (800)747-9307 to speak to a certified credit counselor or to set up an appointment.
CONNECT WITH YOUR COUNSELOR
You don’t need to be worried about being shuffled from person to person, because you will be assigned one counselor throughout the entire counseling process. You will be able to call and ask for your personal credit counselor at any time during business hours.
Your personal credit counselor will ask you to gather specific information for your initial counseling session, such as credit card statements, values/balances of assets and liabilities, and a general idea of your monthly income sources and spending habits. This will help in the counseling process as you discuss your current situation, including the issues you are facing and your goals and objectives for your finances.
DEVELOP YOUR BUDGET
Using the information you provide, your credit counselor will help you to develop a thorough monthly budget that will help you reach the goals you’ve identified and will put together an accurate picture of your debts and assets.
Your credit counselor will provide you with a Personal Action Plan to address the issues you are facing and the personal goals and objectives you’ve identified. They will assist you as you determine the best available option based on your situation. This plan may include changes and activities you can do on your own, or it may direct you to outside resources that would be of help to you. In some cases, your credit counselor may recommend using a Debt Management Program, which Family Life Credit Services (FLCS) would be able to provide depending on your situation.
Once you have determined that a Debt Management Program is right for you, your personal financial counselor will work with you to determine your best program start date. Much of this is determined by your current financial situation. Your counselor will then issue you enrollment paperwork to complete.
When the proper enrollment paperwork is completed and returned, FLCS will begin working with your creditors to secure accepted proposals. In some cases, it can take several weeks for all program proposals to be accepted, but any payments you make during the proposal process are being applied to your account with each creditor. Some creditors want to see you have made 1-3 on-time payments before they will accept a proposal. If, for any reason, a creditor refuses to accept a payment, those funds will immediately be refunded to you.
You are responsible to make on-time monthly payments to FLCS. FLCS disburses your payment each month to all your creditors. Making timely monthly payments will help to ensure that your creditors do not drop you from the Debt Management Program. In many cases, a missed payment may cause your creditors to drop you from the program and raise your interest rates and minimum payments back to where they were before you were enrolled on the Debt Management Program. If dropped from the program, some creditors may not allow you back on for 1 to 5 years.
You must monitor your monthly statements and communications from both your creditors and FLCS. It is important that you review each statement you receive from your creditors and FLCS to be sure all your DMP benefits are being applied to your account. FLCS does not receive monthly statements from your creditors. It is your responsibility to open your statements each month and report to FLCS anything that does not look accurate. FLCS will handle any concerns you may have with your creditors and will contact them on your behalf.
Stay connected with FLCS through ongoing education opportunities, newsletters, and courtesy calls. Should you encounter life-changing events during your program, you should always keep your counselor informed. As you pay off your last creditor, you will be issued a certificate of completion and big congratulations!
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.
Top 5 Reasons you might need debt management
- Having difficulty making minimum payments.
- Making minimum payments, but balances are not going down due to high interest rates.
- Wanting to reduce/consolidate payments.
- Over-limit and late fees will not stop.
- Looking for a focused strategy to pay down debt.
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.
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.View Available States & Disclosures
Sample Action Plan/Goals
What Our Clients are Saying About Us:
FLCS has been an encouragement in many ways through these years as we have dealt with the weight and realities of credit card debt in our lives. Moving from a place of "feeling" like there is no hope in this area to a God answering our prayers with educated and Christ-focused servants willing to help us get out of the pit we put ourselves in. FLCS staff have always been genuinely helpful, humble, professional and honest. I don't know what we would have done all these years without their part in our lives. I trust them immensely, praise the Lord for them and recommend them over and over. -Tara in CA— Testimonial – Tara
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