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Debt Management Plans (DMP)

A Debt Management Plan (DMP) is a repayment plan where a credit counselor helps you determine how much you can pay toward your debt, negotiates with your creditors, and then uses the money you provide to pay your creditors until your bills are paid off. Debt management plans are designed to help you get control of your debt without inflicting as much damage to credit as debt settlement or bankruptcy would.

If you're having difficulties managing debt on your own, debt management plans offer several advantages:

  • Payment management: Your credit counselor takes over the payments so you can focus on other aspects of your life.

  • Single monthly payment: You make a single payment each month instead of several, so handling your finances is simplified.

  • Financial education and support: Credit counseling agencies offer workshops, additional counseling sessions, and other resources to help get you back on solid financial footing.

  • Budget help: Your counselor works with you to develop a livable budget that makes room for debt payment and savings.

  • Fewer collection calls: Once your DMP is in place, you should get fewer calls from creditors and collection agencies.

DMPs are primarily for credit card debt, though sometimes collection accounts and unsecured loans can be included, such as medical bills. Secured debts such as mortgage and auto loans, and legal bills,  are not included in DMPs. Your credit counselor should provide information on how to best deal with secured debt.

Money Management Counselors (MMC) is a licensed branch office of Debt Management Credit Counseling Corp (DMCC). As a DMCC branch, MMC's Debt Management Plan is designed to pay off the enrolled debt in 5 years or less. Our program takes your unsecured debts and consolidates the payments into one easy monthly payment.

DMCC collects one monthly payment from you and disburses it to each of your creditors according to an agreed payment schedule. While enrolled in a DMP, most creditors cease their collection efforts, reduce interest rates, and report your account as current to the major credit bureaus.​

The monthly payment on a DMP is often less than the individual monthly payments a client would be making on each credit card and/or debt.  Often the interest rate can be substantially reduced.


Some advantages of a DMP vs. a Debt Settlement are as follows:

  • Debt settlement firms require you to stop making debt payments.

    • The thought is that if you stop making payments, your account will eventually become delinquent. At that point, usually, when your account is referred to collections, the creditor will be willing to settle for less than the full amount owed. The problem is while you wait out the process, late payments are regularly reported to the credit bureaus, damaging your credit. With a DMP, the goal is to keep your credit in good standing and negotiate terms that will allow you to pay the debt in full.

  • Debt settlement companies have a profit motive.

    • Debt settlement companies are for-profit businesses that usually charge a percentage of the settled debt. For example, if you owe $5,000 and your debt was settled for $3,000, the company may charge you 25% of the $2,000 they saved you—costing you $500.

    • You may have to pay taxes on the settled sum. The forgiven debt of $600 or more is considered taxable income by the IRS. The settlement discount, then, may not be as attractive as it initially seemed.

Though wise not to avoid making credit payments as a strategy to reduce debt, debt settlement companies can't do anything you can't do for free on your own.  MMC can assist you with this process if, through counseling, this becomes a solution of choice.

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