A debt management plan (DMP) goes beyond credit counseling by providing you a structured program that helps you lower your debt through monthly payments. Your debt management plan is personalized for you. A credit counselor can look at all your enrolled debts and then work with creditors to see if they will provide you with a lowered interest rate, referred to as a “concession rate. ” Then the amount of your single monthly payment to the debt management plan depends on the newest concession rate(s)
It’s crucial that you remember that in a debt management plan, you don’t pay your creditors directly. Instead, you pay the DMP each month and they’ll utilize this money to distribute payments to your creditors. Through this process, you’ll be paying back 100 percent of the debt, plus interest.
Depending on your financial situation and how much you can afford to pay monthly, normally it takes about 36-60 months to settle debts through a DMP.