FAQ – Debt Management Plans


What happens after enrolling in a debt management plan program?

Prior to receipt of your first scheduled monthly payment, we will send proposals to your creditors requesting debt management plan benefits for your accounts. The proposals will include your account information and a proposed lower monthly payment amount based on your account balances and creditors’ policies.  If the information used to calculate the proposals is not accurate, the proposals may be declined by your creditors, which is why it is most important that the account information you provide us during the enrollment process is correct. If one or more of your proposals are declined, we will need to correct your account information and resend another proposal.

When will I receive benefits from my creditors?

Most creditors start granting benefits upon acceptance of your proposals. However, some creditors may wait until you make your first two or three timely payments before offering full benefits. Once benefits are granted, they will be reflected on your statement. During this initial period it is important to carefully review your monthly creditor statements to verify receipt of your benefits.

Should I continue to pay my creditors directly while the plan proposals are pending?

If your accounts are current at the time of enrollment, failure to make the minimum required payments prior to the time they are accepted by your creditors for enrollment in the debt management plan will cause the accounts to become past due. If you have the funds available, we recommend you continue to make payments directly to your creditors equal to the amount your pre-plan minimum payments exceed the lower plan payments being made through us until such time the plan proposals have been accepted.

How is this going to affect my credit rating?

When you enroll in a debt management plan, your accounts remain with your creditors who will continue to report your accounts to credit bureaus based on their own individual policies. Some creditors report enrolled accounts with a “cc” mark for “credit counseling”, which is not a factor, either positive or negative, in the calculation on your credit score. However, when you enroll accounts in a debt management plan the accounts are closed and additional credit on the accounts is no longer available. Having accounts closed may affect other factors that do affect your credit score, such as your outstanding debt to credit limit ratios. Credit scoring is based on many factors pertaining to each individual and it is undeterminable how enrollment in a debt management plan may affect your individual credit score.

It is important to note that we do not report your accounts to any credit bureaus and the debt management plan program is not designed to improve your credit score. Our purpose is to assist you in getting out of debt. However, if timely and consistent payments are made while on your debt management plan, your creditors will be reporting a positive payment history and your debt to income ratios will be reduced, which should improve your credit score provided all other factors remain the same.

Can I use my credit cards while they are on the plan?

You cannot use the credit cards you enroll in a debt management plan. We recommend you notify your creditors to close your accounts prior to enrolling in the plan, so your credit report reflects that your accounts were closed by you and not your creditors. Once your creditors receive proposals from us for debt management plan benefits, they will close your account if it is still open. During your debt management plan program, it is at the discretion of your creditor whether or not to reopen your account or grant you a new credit card. Any questions regarding this matter should be directed to the individual creditor that issued the credit card, as many different creditors vary in their policies.

Will I continue to receive statements of my accounts?

While enrolled in the debt management plan, you will continue to receive monthly statements directly from your creditors. You should review these monthly statements to verify that your payments through us have been posted and your benefits remain in effect, and should contact us immediately if not. Please be aware that we do not receive account statements from your creditors, so it is important that you update any change of address you may have during the program directly with them.

You will also be provided online access to your account with us, which will show all of your payments to us and our corresponding disbursements to your creditors. If you do not have the ability to access your online account, you may contact us at anytime and request a statement be sent to you.

When one of my enrolled accounts is paid in full, where do the funds go?

Once one of your accounts is paid in full, the funds are reallocated to another one of your creditor accounts. This reallocation of funds is necessary to repay all of your accounts within the required time period specified by your creditors at the inception of your debt management plan.

What happens if I cannot make a payment to DMCC?

We understand there are times when it is difficult for a client to make a monthly payment. However, please be advised that creditors require payment every 30 days.  If you miss or are late making payments, your creditors may drop your accounts from the debt management plan and remove all associated benefits. Consequently, any reduced interest rates you may have been receiving could be increased back to the rates you were paying prior to the debt management plan, fees may once again be assessed, and the collection process such as letters and phone calls might begin. It is for this reason we highly recommend and encourage that you elect to remit your monthly payments to us via automatic ach withdrawal.

Can I restart the program if I am unable to make my monthly payment?

Most creditors will drop your account from the program after 45-60 days of non-payment. If your account is dropped, some creditors will allow you to restart the program without any change, some creditors will require updated information and new proposals in order for you to restart the program, and some creditors will not allow you to restart the program at all. In the event your accounts are dropped from the program and you wish to restart, please contact us and we will do everything we can to assist you.

Can I lower the monthly payments required by my creditors during the program?

Creditor policies dictate the extent to which our office can assist you with this request. Generally, in order to qualify for a lower monthly payment, you must have made at least six consecutive timely payments and be able to demonstrate a financial hardship that prevents you from continuing to make the existing payment. However, since required monthly payments are based on a percentage of your account balances,  it usually takes a year or more before the balances are reduced enough to request a lower monthly payment. Please note that some creditors refuse to lower payment amounts once an account is on a debt management plan program with them. If you are struggling to make your monthly plan payments and would like to maintain your benefits, please contact us and we will let you know if any of your accounts may be eligible for a lower payment.