I'm on a DSP, But I'm Not Really Sure What That Means. Can you Explain the Difference Between a DMP and a DSP?

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I'm on a DSP, But I'm Not Really Sure What That Means. Can you Explain the Difference Between a DMP and a DSP?

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We are answering our customer's top questions regarding their participation in the Debt Settlement Plan (DSP). We want our customers to find continued success by fully understanding their plan and what it takes to be successful.  

This month's question: Can you explain the difference between a Debt Management Plan  and a Debt Settlement Plan ? A DMP and a DSP are two very different options to pay down your unsecured debt. One of the most important factors to take into consideration when deciding which program is right for you is the amount of money you can afford to pay each month. With a DMP, it is imperative that you make the same payment amount every month, so that we can negotiate better repayment terms, such as lowered interest rates with your creditors. A Debt Settlement Plan (DSP) is usually offered to clients who cannot afford a DMP and do not want to file for bankruptcy.

Here are some things to consider when choosing DSP. 

  • Monthly payments may be less.  With a DSP, your monthly payments are lower than the DMP monthly payments. This is because we are working to negotiate with your creditors to accept less than the amount you owe.
  • Escrow account.  Your monthly payments are deposited into an escrow account. As your account builds value, we negotiate with your creditors to accept a lesser amount than what is actually owed, based on the amount you are able to pay.
  • Your accounts become delinquent.  In order for settlements to be considered, the accounts must first become delinquent, which means that your creditors will stop receiving payments from you until they are willing to negotiate for less than the full balance due.
  • Increased collection activity.  Participating in a DSP may increase creditor collection activity. That's why working with an experienced firm that has strong creditor knowledge and solid relationships is critical to your success. 
  • Risks involved.  While this is a better alternative to bankruptcy, there are greater risks involved with a DSP that should be considered prior to enrolling, such as damage to your credit and the potential to be sued. 

Making the decision to take control of your debt is never easy. Whether you choose DMP or DSP patience and dedication are essential to your success. If you have a question you would like to see posted please feel free to leave it in the Comments section or, ask directly in our Ask the Expert Forum

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  • I am on the DMP. It is the best thing that has happen to me. I wish I had made this decision earlier. My creditors are working with me and so far things are looking good.

  • Hi Chacha59,

    That is great to hear! Best of luck to you!

  • I totally agree with Chacha59! I've been on DMP since 2007 and will have what was $30K in credit card debt paid off by November :D

    I have one AMEX card I use, and that balance is paid off monthly.

    I am excited to see my debt go down and to almost be gone!!

  • @barins That is awesome news! Not only are you paying down your debt you are also making smart financial decisons by choosing to pay the balance on your Amex monthly; good for you!

  • I have been on the DSP since Nov and I have had a couple accounts settled, but I just got a summons for a large acct. I am not sure I can handle this... my nerves are just torn up... I think about it night and day...Can you change from the DSP to the DMP after you have let things go so far past due ?

  • @vickeyp Receiving a summons is certainly stressful and we want to help you through the process. Look how far you have come already settling other accounts. We certainly understand if you would like to switch plans here’s what you need to know.

    It is possible to switch plans however it is more difficult to switch from DSP to DMP as your creditors would not have been receiving payments during DSP. Please understand, although it happens, the plans are not designed to switch back and forth. Creditors need commitment and consistency on both plans; those are the keys to success for DMP and DSP.

    A creditor may not accept a proposal on the DMP depending on the stage of delinquency. If the creditors refuse to participate, you can still be sued on the DMP.

    We certainly want to help you do what is best for you and your financial situation, we just want to be sure you understand the ramifications of doing so.  

    If you still want to switch, please contact Customer Care at 1-800-CARE123 to cancel the DSP and make this change prior to your next debit date.

    Best of luck!


  • Just made my last payment last week and now all my credit cards are payed off!!!! Couldn't be happier.  Talk about a weight lifted from my shoulders.  My credit score has greatly improved and is going higher and higher every month.  Thanks CareOne!!! :)

  • @markxhernandez We are so proud of you! Congratulations with your success on the plan and great news about your credit score! Thank you so much for sharing :)

  • I have been on the DMP since 3/2007. When I make my payment at the end of this month, it will be my last payment and my creditors are all paid!  When I realized just yesterday that this is my last payment, I literally had tears in my eyes. I can't tell you what a huge relief I felt. This has been the best thing for me.

  • @nellie  Congratulations! It is an amazing feeling to know that you are debt free and have your financial freedom back.  :)

    So happy for you!!

  • I can only state what I have been going through.   When looking at DMP and DSP,  DSP worked best for me.    I have only been on DSP for 6 months.    Two debts are already settled.    Bank of America was $3000 and it was settled down to $1210.   Bill Me Later was $700 and it was settled down to $342.     Now,  my largest debt is in the process of an offer acceptance is from Partners First.   That debt was $5987 and they are looking to bring the amount paid to $3153.      That sounds like a high amount,  but here is the kicker,   it will be paid off in 9 months.    The statements I get tell me it will take 18 years to pay off.     Tell me which one you want?      DSP has worked for me so far.  The attorneys at Persels have been in constant contact with me.   I have been open, honest, and let them know what I can do or can not do and they have totally understood because they are there to support you and look out for your interests.     Because the debts are melting away,  I even increased my payments today.   DSP, however, will not work for everyone.     The cons in this process is that my credit is not good,  but my credit was not good before this.   IIf you value your credit rating,  this is not the route to take.

  • DSP is also working for me.   I have been on this plan since 7/11 and have one card paid off and paying on two more.   The downside is that Discover is sueing me and will go to a mediator next Tuesday.   Hope ny nerves can take it.

  • I spoke with a representative just two days ago and was told that creditors can not sue us. Are you now saying that he was not being truthful and I have now put me and my family in a position to possibly be sued by our creditors????

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