Debt Management Plan

Are your minimum monthly payments more than you can afford?

Are you considering borrowing money to consolidate your debts?

Have you fallen behind on your payments and can't catch up?

Are you considereing filing bankruptcy?

What is a Debt Management Plan?
A debt management plan, or DMP, is a possible solution available to consumers who cannot repay their unsecured debt (usually credit card debt), under normal conditions. AAA Fair Credit FOundation works with consumers to develop a repayment plan with affordable monthly payments that allows them to repay their creditors within a reasonable period of time.

Personal One-On-One Counseling
If your financial problems stem from too much debt or your inability to repay your debts, our Counselors can conduct a financial review session. During the review session the Counselor will request detailed information on all sources of income, assets, liabilities and expenses, present options and strategies,. DMPs are not always the best solution for debt-burdened consumers. You should sign up for one of these plans only after your Counselor has spent time thoroughly reviewing your financial circumstances surrounding significant changes in your finances, assisted you in creating a spending plan and has provided you with individually-tailored recommendations. Keep in mind that a DMP is only one option of many to consider for individuals experiencing financial stress, but have the financial ability and capacity to achieve long-term success on a DMP.

Being able to detect the symptoms of financial troubles stemming from debt allows one to craft a DMP that will address the impending problem. Sustenance of the plan is driven by the positive thought of future financial stability and being debt-free.

Warning Signals - Are you in Financial Danger?
So let's make this clear: If you're able to pay your bills and are current on all your accounts, you almost certainly don't need debt managament intervention. If your interest rates are too high, you usually can negotiate a lower rate with your credit-card companies just by asking -- or threatening to move your account elsewhere. Be warned: If you're too far in debt, a DMP may not be able to help. There are limits to how little your creditors will accept, and our service may not be able to cut your payments enough to either give you breathing room or get you out of debt. If that's true, bankruptcy may be the best of bad options.

Here's a few warning signals when you might consider enrolling in a DMP:

• Maxed out your available lines of credit and can't pay the minimum payments
• Consistently receiving collection calls from creditors
• Consistently late paying one or more of your regular bills
• Self efforts to work out reasonable repayment plans with your creditors have failed
• Dependent on payday cash advances
• Hide credit card bills from family members
• Float or bounce checks regularly

Benefits of a DMP:

• Lower monthly payments
• Reduce credit card interest rates
• Eliminate late fee or other fees that have accumulated on your account
• "Re-age" your credit accounts by re-categorizing them as "current" instead of being "late"
• Stop the repetitive collection calls and legal notices
• Help restore financial balance through consistent monthly payments
• Establish a positive payment history with creditors
• Receive ongoing financial education advice
• Eliminate frustration and save time with one monthly deposit
• Learn the discipline of managing your money and eliminating debt
• Offer fair and equitable repayment to all participating creditors
• Lower your debt-to-income ratio to qualify for better interest rates
• Relieve stress and restore financial stability

Surveys show that active clients who have remained in a DMP for over a year report the following impacts:

• Lower levels of financial stress
• Better financial wellness today
• Feel better about current financial situation
• Doing better at paying rent/mortgage and bills on time
• Not pre-occupied with financial concerns at home
• Started contributing to retirement plan
• Feel more secure
• Less frequencey of financial concerns interfering with work
• Missed less time from work because of inability to pay for child or elder care
• Missed less time from work to handle personal financial matters
• Less frequently bothered with health problems

How to Make a DMP Work for You

The following steps will help you benefit from a DMP, and avoid falling further into debt.

• Continue to pay your bills until the plan has been approved by your creditors. If you stop making payments before your creditors have accepted you into a plan, you’ll face late fees, penalties, and negative entries on your credit report.
• Contact your creditors and confirm that they have accepted the proposed plan.
• Make sure the payment schedule allows your debts to be paid before they are due each month. Paying on time will help you avoid late fees and penalties. Call each of your creditors on the first of every month to make sure the agency has paid them on time.
• Review monthly statements from your creditors to make sure they have received your payments.
• If your DMP depends on your creditors agreeing to lower or eliminate interest and finance charges, or waive late fees, make sure these concessions are reflected on your statements (*please note - not all creditors list concessions on statements).

How do I choose a reputable DMP service provider?

Beware of providers who are less than reputable — their high fees and unethical policies can leave you in worse financial condition than when you started. Here's what to look for in a debt management provider:

• Properly licensed and bonded
• Counselors spend at least 30 minutes talking to you about your finances before they suggest a DMP.
• Spending enough time thoroughly reviewing your financial situation.
• Charge high fees for enrolling in credit counseling or a DMP.
• Solid record with the Better Business Bureau (BBB)
• In business long enough to have built a solid reputation
• Prompt monthly statements
• Educational resources to help you stay out of debt
• Employ experienced Certified Counselors
• Provide 24-hour account access
• Electronic payment processing linked to creditors
• Have existing relationships with most creditors
• Offers multiple options to help you get out of debt
• Has a support network to connect with other community partners
• Offers reasonable fee structure based on ability to pay

Certified Financial Counselors
The credit counselor's main responsibility is to discuss where you are financially and what options are available to you. They also maintain open communication with your creditors. Frequent communication with FCF will help you stay on track in becoming debt-free. Help is just a phone call away. We have a toll free hotline available to our clients and anyone who needs financial counseling assistance.

Creditor Participation
Your creditors will receive proposals within seven to ten days of your plan enrollment. It will often take four to seven weeks for them to process the proposal. Most creditors require three consecutive payments through the debt management plan before they will offer benefits. Often your creditors may notify us only when the proposal is declined. In this event, we will research the cause and work with you and your creditor to make the necessary changes to have the proposal accepted. Please check your creditor’s statements to see if they have started applying benefits.

DMP Service Fees
Any program administration service fees charged for the debt management program are based on applicable state laws. Because the monthly DMP administrative service fee is a payment for service and is not considered voluntary, the fee amounts may not be considered as a tax-deductible contribution. If however, a client participating on a DMP and would like to make a seperate contribution aside from their monthly DMP administrative service fee than this amount would be considered voluntary and can be considered tax-deductible. Given the tendency of the changes in tax laws, we recommend you contact your accountant or the IRS for that information.

Credit Reports & Credit Scores
According to the Fair Isaac Company (FICO), the creator of credit scoring, has publicly stated that since 1999 FICO has completely ignored any credit report mention of credit counseling, debt management plans, or any other form of counseling. Therefore, credit counseling and the establishment of a debt management plan may impact the consumer's credtit rating and credit score eithor favorably or unfavorably, depending on creditor policies and the consumer's payment history before and during participation in the debt management plan.

Staying On Track
No one is perfect and it is possible for to make a costly money mistake after receiving the proper credit counseling services. The good news is FCF is here to assist you in all your financial making decisions. Call today to find the right debt solution for you.

If you or someone you know is feeling overwhelmed by debt, please call our National Financial Counseling Education Center at 1-800-351-4195 for a free confidential consultation with a Certified Financial Counselor. Counseling is available in-person, by phone or online. Get out of debt and get on with your life today, not tomorrow!

**NOTE: THIS SERVICE NOT AVAILABLE IN ALL STATES. A DMP alone is not credit counseling and DMP's are not for everyone. You should sign-up for one of these plans only after a certified credit counselor has spent time thoroughly reviewing your financial situation and has offered you customized advice on managing your money. A counselor may answer questions about bankruptcy, but not give legal advice. If legal advice is necessary, the client will seek appropriate assistance.