What is Debt Management Plan?
Debt management plan is basically a program design for those people having difficulties in managing their debts. DMP is also the best plan for the payer to pay the debt in the lowest possible interest in the short period of time. Basically, companies offering DMP serves as the counselors of the client. They will be the one to negotiate with the creditors.
Once enrolled, even the counselor is the one negotiating with the creditors it is still the client’s right to be updated from time to time. The client has the right to ask the counselor 24/7 regarding the latest update of his debt.
In considering a debt management plan company, make sure that it is legally established and registered. Look for the best DMP Company that will surely help you in managing your financial stability. There’s a lot of organization that is giving a free consultation on how to manage the debt. Beware of those company that has hidden charges and asking for non-justifiable fees.
Important Things to Remember when You Want to Enroll in DMP
• Not all kinds of debt may include in the plan. Some secured debts such as housing loan, auto loan and an educational loan will not be covered.
• Your counselor will ask you to cut all your active credit cards. They will also go to ask you not to apply in any credit company while you are in the plan.
• Some personal information such as your income, daily budgetary allotment, all financial obligations, monthly amortization and even your vacation plans will be discussed with your counselor.
• The counselor will definitely give you advice on how to reduce your expenditure. It may be personal but remember that as a counselor it’s his duty to do that.
• After the counselor assesses your income and debts, he will propose now a plan on how to pay all your obligations. The creditor and the client should both agree on the plan before the start of the process.
• The client will receive a monthly update. But, it is still the right of the client to be updated more often.
• If ever you received unexpected money, you can pay your debts in advance even though it’s not what on the plan.
• DMP is not the only solution to the problem. The client should do their best in order to solve their financial problem.
• The client is still allowed to communicate with the creditors. It is for them to validate the legitimacy of the attending counselor.
Remember the DMP is an agreement among three independent parties; the Client, the counselor, and the creditors. It is important that each party should perform their indicated duties in order for the DMP to be successful.
The Duties of the Counselor
The main duty of the counselor is to be the head negotiator between the client and the creditors. Specifically, the counselor’s part is as follows:
• Planer. Basically, they are the one responsible for making and carry out the plan. They are tasked to do a workable budgetary allotment that works for the entire duration of a plan.
• Representative. The counselor has also the right to speak on behalf of the client or even the creditor.
• Payment Chanel. It is their primary duty to deposit the monthly payment for the creditor.
• Prepare Reports. They should prepare the monthly report and give status to their client and the creditors.
• Teacher. It is also the duty of any counselor to educate their client on the proper ways in managing their financial aspect.
• Moral Supporter. The counselor should be considered as the no. 1 supporter of their clients. They should help them understand positively the process of paying a debt.
The Duties of the Creditors
Creditors play an important role in DMP. The creditors should work with the counselor for the success of the plan. The creditors have the following duties:
• Payment Receiver. This is the vital role of the creditor. They are the receiver of payments. It is in the agreement between the creditors and the counselor on how the payment should be done. It is also on the agreement the length of time for the payer to pay all his debt to the creditor.
• Stop Communicating through Phone. Since they are already on a plan, the creditor should stop calling the payer. It is agreed that the creditor will receive the monthly payment from the client.
• Concessions. The creditor should also give huge consideration to the payer. If it is possible, the creditor should remove all unnecessary interest and other additional payments.
• Clean the Payer’s Name. It is necessary to the creditors to give certification to the client if all the payment had been made.
The Duties of the Client
The client is the most important part of the plan. The payer has the following duties:
• Pay. Basically, it is their role. They have to pay the creditor base on the agreed plan.
• Learn. The payer should be open-minded. He should be willing to learn new techniques on managing his money. He should listen to his counselor or to any financial expert.
• Refrain from Involving in Any Debt Again. The client should learn from his mistakes. After the plan, he should be wise on dealing with his financial matter.