Debt Management - Credit Counseling FAQ
Debt Management - FAQ
People hear a lot of things about debt management and credit counseling programs
but may wonder what they actually do. Below are several
of the most commonly asked questions concerning debt management
and how it really works.
1. How will a debt management program help me?
A debt management program allows you to combine your monthly
bill payments into one single low monthly payment. This
eliminates making several monthly payments to different
companies. You can now make the one payment with one interest
rate. Not all creditors will participate in the program,
but some of those who do will allow you to reduce your monthly
payment and in some cases will reduce monthly late fees
and interest charges when you have established some sort
of payment history. Debt management programs are a good
way of getting yourself of debt quickly and easily. What
the debt management program does is called debt consolidation.
They consolidate or combine all your bills into one payment.
2. Will the debt management program stop collection
calls?
Collection calls are made to those people who are behind
in their monthly payments. If you take part in the debt
management program, after your third consecutive payment
the collection calls should stop. However, since some companies
are quite large calls do continue in some instances. If
this does happen then you should contact a representative
from your debt management program with the name of the creditor
who is calling. You may continue to receive calls if your
creditor has not been notified of your enrollment in the
debt management program.
3. How will the debt management program affect
my credit?
If your credit report currently reflects late or missed
payments, enrolling in the debt management program can improve
your credit record by facilitating consistent monthly payments.
However, if you have never missed a payment but are sending
reduced payments under the debt management program then
some creditors make mark your payment as late or missed
which can blemish your credit report. The objective of the
this plan is to help you eliminate credit card debt, therefore
a creditor may refuse to issue you a card while you are
enrolled in the program.
4. If I cancel DMP can I still receive MBS benefits?
There is a option that you can take advantage of to still
receive MBS benefits. To find out more you can call toll-free
1-800-458-8646.
5. How much will the DMP cost me?
Cost of enrolling in the program may vary depending on
state regulations. The number of creditors that you place
on your debt management program may also affect the amount
you pay. There is an activation fee as well as a monthly
service charge for using the program. You can find out how
much cost you will infer by completing the first two steps
of the online process. This can be done free of charge as
there is no obligation to continue with the process.
6. Can I still use my credit cards if I enroll
in the debt management program?
The objective of this program is to eliminate credit card
debt. This can be done through bad credit card consolidation.
However, while enrolled in the program, creditors will deactivate
your cards so that you cannot use them until you have either
paid off the account or greatly decreased the amount owing
on the account.
However in this case you can take advantage of the MasterCard
20/20 prepaid credit card. You simply put money on your
card and then use the card as you need until your limit
has run out. There are no interest charges or late fees
associated with these cards.
7. Can I change the monthly payment amount?
For new applicants who are completing the enrollment process
there is an option to increase the amount of your monthly
payment. However, once the determined amount to be paid
each month has been given to the creditor you cannot lower
this amount. If you feel that you need to lower your monthly
payment it is recommended that you wait until you have made
at least three consecutive payments. After such time you
can consult a DMP representative about lowering your payment.
Existing Members can in fact change the amount of their
monthly payment by simply accessing their account through
the Member Log-In link. From here they select Increase Creditor
Payments. They can select the option of increasing just
the next monthly payment or can make this amount permanent.
To change the payment amount permanently you do the following:
• Enter the amount your wish to pay
• Click SUBMIT
To change the amount of the next payment does the following:
• Enter the amount you wish to pay
• Check the box that is label Next Monthly Payment
• Click SUBMIT
Any changes made to amount being paid must be done so three
business days prior to the due date. If you have changed
the monthly payment amount permanently and wish to lower
the payment again you may do so by contacting the Help Center
link on the website.
YOU CANNOT DECREASE PAYMENTS ONLINE
8. Will I still receive statements?
You will continue to receive monthly statements from creditors.
The purpose of this is to track your payment history. You
can also check you history online through the CareOne website.
You will also receive monthly statements from the DMP to
help keep track of your credit report and payment history.
9. When is my payment due?
By enrolling in the DMP you may select the payment date
that works best for you. Some people like to pay bills at
the first of the month, others the end. The choice is yours.
If your date of payment falls on a weekend or holiday, the
amount will be taken out on the next business day.
10. When will I start paying my bills?
You decide when you make your first payment. You can make
a payment in as little as three days after enrollment or
you can wait up to 30 days after enrollment. However you
must make a payment within 30 days after enrolling in the
program.
11. How will my creditors know I have joined DMP?
Once you have completed the enrollment process a proposal
will be sent to the creditors that you want to add to your
plan. If the creditors wish to accept the proposal and no
changes need to be made, the creditors will make no contact.
However, if your creditors do not accept the proposal a
DMP representative will contact you. Included in this proposal
is the account number, balance of the account and the payment
plan indicated on your repayment schedule.
12. Is a debt management program the same as filing
for bankruptcy?
The answer to this question is no. It is not the same as
filing for bankruptcy. The DMP is plan for debt reduction.
It is a form of debt relief. It is a voluntary agreement
between you and your creditors. It is a plan for consistent
payments in exchange for the reduction and/or elimination
of interest and fees. Bankruptcy on the other hand is a
proceeding that takes place in a federal court. The assets
of the individual are sold and the individual is relieved
of further liability to their creditors. Bankruptcy stays
on your credit report for at least 7 years.
13. Can creditors take legal action against me
while I am enrolled in a debt management program?
Your creditors do have the right to take legal action against
you while you are enrolled in the debt management program
(DMP). If this does happen you should contact a DMP representative
immediately. If you are not being taken to court then your
payment history while enrolled in the program can be used
as evidence of your good faith effort to repay your debt.
14. How do I close my account?
The close your account follow these steps:
• Click MEMBER LOG-IN or visit the My Account link
on the website.
• Visit the Help Center and choose EMAIL US
• Choose “I am ready to close my Debt Management
Account” as your subject line.
• In the body of the email request that the account
be closed. This request must be made in least 2-business
days prior to the next payment.
• Finally, fax a signed letter requesting cancellation
in addition to the email.
By closing the account your are now allowing your creditors
to apply late fees, resume collection activities and rise
your APR.
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