The Debt Management Plan: Pros, Cons

The Debt Management Plan (DMP)

A debt management plan (DMP) will only be successful when it is executed with utmost diligence. Proper budgeting and a thrifty mindset will help run the debt management plan smoothly.

Credits: freepik

Here are the dos and don’ts that must be adhered to while involved in a debt management plan.

THE DOS

Press on.

Once you have started with DMP, you will get fewer calls from your creditors. However, it is not guaranteed that they will not call at all. You might still hear from them asking for repayment. Do not get stressed out. Press on with your DMP. Continue making your DMP payments on time. This is the best you can do at the moment.

Acceptance & Patience

Accept the situation you are in. Have patience. Settlement shall take time. If you are disciplined with your DMP, you can pay off your debt.

Include all of your debts

Make sure to include all the debts in your DMP. This will help to build a better plan. At the same time, your creditors will be aware of your entire situation and they will approve your DMP.

Be ready for changes

You may face unexpected costs. So, when that happens, you will be unable to pay your monthly deposit towards the DMP. Inform of the situation to your DMP provider so that he can review the plan to set a new budget for you.

The don’ts when engaged in a DMP

No online help

The Online pieces of advice are generalized. Each person’s debt load is different. You need a plan that fits your situation. Hence, do not go online to search for solutions. That will only be a waste of time leaving you confused and anxious. Stick to what your credit counselor consults.

Do not go overboard with DMP payment

Yes, you are in debt. You are trying your best to come out of it. But you still have your regular bills to be paid, like tuition fees, rent, food, and electricity bills. Do not neglect them. In such a tense situation, do not add to it by reducing your quality of life. If you and your family remain healthy and content, you will be able to find new income sources and pay off debt successfully.

Do not pay more than your DMP 

If you make any payment in excess of your negotiated plan, the creditors will think that you can afford to pay higher. They may try to squeeze out all of their loans. So, never make any extra payments to your creditors. If any creditor is pushing you to pay anything more than the decided amount, you can inform your DMP provider and also make a complaint against them.

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Credits: MoneyNerd Guides

FAQ’S

What are the Pros of Debt Management Plans?

The Pros of a Debt Management Plan are,

1. Become debt-free within five years,
2. Simplify your payments, and
3. Improve your credit score.

What are the Cons of Debt Management Plans?

The Cons of a Debt Management Plan are,

1. Lose access to credit cards,
2. No new lines of credit, and
3. Creditors may not participate.

What is a Debt Management Plan (DMP)?

A debt management plan (DMP) will only be successful when it is executed with utmost diligence. Proper budgeting and a thrifty mindset will help run the debt management plan smoothly.

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