A Straight Talk on Debt

A Straight Talk on Debt gives you the real deal on debt, straight from our employees and personal finance experts. Learn more about debt relief plans and how to be financially fit.

What is a Debt Management Plan?

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If you contact CareOne Debt Relief Services® you may know you need help; but may not know what kind of help you need.

In many instances you have either fallen behind on your credit card payments, or feel you are about to fall behind.

 

At CareOne Debt Relief Services® our primary goal is to help you regain control of your debt and help you put together a plan to get the debt paid off within three to five years.

The most popular method is a Debt Management Plan or DMP.

 

How does it work? 

 

A Debt Management Plan (DMP) is a structured repayment plan which involves you making a payment to a Credit Counseling Agency, who then distributes the payments to the creditors. The creditors generally offer some type of benefit to customers who enroll in a DMP including lower interest rates and waiving late or over the limit fees. A DMP will usually last for three to five years depending on the amount of debt you enroll with and the amount of the monthly payment.  

 

One of the keys to a DMP is making the same payment amount each month, even when your accounts begin to become paid in full. As you pay an account off, the money that was sent to that creditor gets sent to another creditor allowing more money to be allocated to that creditor's balance. 

 

Can I do this on my own?  

 

Some of you may be asking "Why can't I do this on my own?” It is a good question to ask! The answer is you can contact the creditor on your own, but if the creditor does decide to help, which they usually do not unless you are really behind, it may only be for three to six months. When that time has gone by you are left in the same position you started. A CareOne Debt Management Plan is a long term fix to pay off your debt, not just something to help for a few months. Keep in mind there is strength in numbers! CareOne Debt Relief Services® has helped over 5 million people with their debt and processes millions of dollars in payments to creditors each month. Why take on a creditor by yourself?  

 

What benefits will I receive and why do creditors give them? 

 

Believe it or not, creditors were the originators of Consumer Credit Counseling or Debt Management Plans. Studies have shown that people who are on a DMP after they were behind on their payments have better payment rates than those who do not enroll in a DMP. Creditors give benefits in order to reward people for joining a DMP and assisting them in getting their debt paid off faster. Typical benefits can include lower interest rates which are a big driver in getting the debt paid off more quickly. The top 60 creditors lower the interest rate to an average of 9.99% for qualified DMP participants. Benefits may also include the creditor agreeing to waive over limit or late fees which also greatly assist in the debt being paid off more quickly.  

 

Rob Taylor   

 

Rob Taylor is a contributing author for A Straight Talk on Debt. Rob tells it like it is when it comes to the latest debt industry news and shares his advice on personal finance.

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  • Has anyone had a negative impact on their credit because of enrolling in the DMP?

  • Yes, I ahve tonycw69. Negative impact because my credit is at a standstill. Nothing positive is being reported because my credit is frozen, so to speak. So eventhough I have been making ontime mortage and car payments, it is not noticeable because of the DMP.

  • What is Debt Settlement and how do i qualify?  I have a friend who has done "something" and has her credit card debt cut in half.  

  • I signed up with a debt relief program with $16,000 in credit card debt.  I've only been able to make minimum payments for the past two years, so I finally had to do something more proactive.  Now, instead of being in debt for 26 yrs. on this credit card debt, I'll be debt free in 36 months.  Not only would it take 26 yrs. doing it alone, but I would have also paid $32,000 rather than $16,000.  Yes, my credit will be affected, but I'll have a lot more money in my pocket and I'll recover.  Besides, I already have a home and a car.  I just got tired of swimming upstream with someone on my back.

  • after paying off credit cards are you able to use them again of is the accout closed

  • Thanks to careone I will not have to declare bankruptcy.  They have truly pulled my rear out of the fire.

  • I signed up 2 years ago with $25,000 in credit card debt. I only have 1 more year left to go. I am already down to $9,000. I felt like I would never see the end until I found CareOne. I love it and have gotten my mom signed up also.

  • All of these comments sound just like what I was going through.   Thanks for the help so far careone!

  • A debt management plan is a formal agreement between a debtor and creditor(s). Debt Management Plans help reduce outstanding, unsecured debts at a reduced level over a fixed period of time to help regain control of finances.

  • If you are looking for some quality information, tips on saving and more; than browse our blogs! We have fantastic bloggers from all ages and walks of life; who all share one thing in common; they are focused on finances! Here are this week's featured

  • Thanks to all for your comments. I am about to make my third payment. It helps to know that I am head the right direction. I hae my doubts

  • What about the fees and the 30% due?

  • Hi @Groovybarb1954  The fees vary depending on which debt relief plan you choose.  A Debt Management Plan as discussed in the blog above has a monthly fee only.  To learn more about the difference between debt management and debt settlement please see our free resource guide.  www.careonecredit.com/.../comparing-debt-relief-plans

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