Depending on what sources you rely on for your news, the recession is either getting better, getting worse, or staying the same. Isn't it amazing how nobody can agree? One thing they do agree on is the high unemployment rate. When someone loses their job they may be able to collect unemployment, which is only a small portion of what they earned previously. Obviously their budget is impacted significantly.  

Many of our customers who took a proactive step toward paying off their debt by joining a DMP have been impacted by the economy and may have lost their job. They intended to make their payments and the creditors intended to give them benefits, such as a lower interest rate. Unfortunately, our customers' income has suffered and now they are no longer able to afford DMP payments. What can they do? They have invested time and money into paying off their debt; does this mean they have failed? Absolutely not. There are options our customers can take so they stay on track; they just need to call CareOne.   

Hardship Plan  

In some instances, a creditor may be willing to extend hardship benefits to a DMP participant who has had a reduction in their income. The creditor may be willing to lower the monthly payment for six to twelve months or longer, depending on the situation and the creditor. This  lowers the overall payment and possibly provides the savings required to continue with the DMP. You never know unless you call and ask.  

Settlement Plan

Settlement can be the right option for customers who have creditors who do not offer hardship plans or have had such a significant decrease in their income they can not afford the reduced DMP payment. Settlement is an attempt to negotiate with your creditors to accept a lower amount than what is actually owed. When a customer enrolls in a settlement plan, the accounts must become delinquent before the creditor is willing to entertain settlement as an option. Creditors can increase their collection activity; however, this is completely normal and part of the process.  

The Bottom Line  

  • There may be another option
  • Creditors may offer a hardship payment so you can stay on a DMP
  • Settlement can be the right choice
  • You don't know unless you ask

Rob Taylor

Rob is a contributing writer for the Straight Talk on Debt blog. Rob has been in the business of helping people get out of debt for the past six years. He is a product manager with the CareOne team and focuses on making debt relief plans even better.