What Happens After I Enroll In The Debt Management Program
Every journey starts with a first step, and enrolling in a debt management program is a great way to begin the path back to financial health. But whether you ultimately reach that destination – credit card debt eliminated! — depends on whether you follow the financial roadmap found in your DMP.
A debt management program is a carefully structured payment schedule from a nonprofit credit counseling agency that consolidates credit card payments into one affordable monthly amount. There is no loan involved, and credit scores are not a factor in joining.
Creditors offer reduced interest rates in a debt management program, but ask consumers to close all credit card accounts. Sticking to the counseled budget will help you be successful in a DMP, and you should have your credit card debt paid off within a 3-5 year period.
While it may all sound simple enough, you’re bound to encounter plenty of questions, and potential pitfalls, as you navigate your DMP. InCharge Debt Solutions is here to help.
When Will Creditors Start Lowering Interest Rates, Dropping Late Fees, etc.?
Most creditors will start granting these benefits once they’ve accepted your debt management program proposal. Some creditors, however, may hold back these benefits until you’ve made your first three payments on time. That’s why it’s important to carefully review your monthly creditor statements. When these benefits are granted, you’ll see them on your statement. You should also check each month to make sure you are receiving credit for all payments made through InCharge.
Can I Add Accounts to My Debt Management Program?
Adding as many accounts as possible to your DMP is generally a good idea, to maximize the odds you’ll exit the plan debt-free (or as close to debt-free as possible). Keep in mind, however, that the more accounts you add, the higher your monthly payment will be, so be sure that you agree to a monthly payment amount that fits within your budget and that you’re confident you can adhere to.
InCharge will work with you to add as many accounts as makes sense given your personal situation, but there are some caveats.
- Only unsecured debt can be included in a DMP, meaning that secured accounts such as mortgages and car loans are not eligible.
- Some creditors may prevent you from adding credit card accounts that you have recently charged on or opened within the past nine months.
- If you’ve created a “hardship” program directly with a creditor to pay off a specific debt or have a separate agreement through a credit counseling agency, you generally can’t include that account in your debt management plan.
While credit card hardship programs allow you to work directly with creditors, it can be cumbersome if you have many debts to pay off as you’ll have to arrange a payment plan with each one individually. The advantage of a DMP is that it allows you to bundle all your debts into one monthly payment.
Can I Apply for New Credit or Use My Credit Cards on a DMP?
In short, applying for new credit on a DMP is not a good idea.
The whole point of a debt management program is to pay off your debt as quickly as possible while rebuilding your credit score. Taking on new debt runs counter to that goal. Plus, creditors may cancel your DMP if they see you applying for new credit or continuing to run up bills on your credit cards. That behavior calls into question your ability to meet the terms of the agreement. In fact, any credit card account included in your DMP is required to be closed as a condition of receiving a reduced interest rate to help you pay off the debt.
Can I Pay More Than My Monthly Payments?
Yes. You can always pay more than the minimum amount required in your program for debt management, but never less. Make additional payments by logging into I’m InCharge.
Will My Monthly Payment Go Down Once a Debt Account Is Paid Off?
No. Once one account in your DMP is paid off, that portion of your monthly payment is redirected to one of your remaining accounts. Typically, the money goes to your next-smallest account, or the one carrying the highest interest rate.
The goal of a DMP is to eliminate all your credit card debt within 36 to 60 months, so it’s important that your monthly payments remain consistent if you hope to reach the finish line within the time period specified in the plan.
How Do I Know If My Payment Was Received?
Login to I’m InCharge to check the status of your payments. You can also call customer service with questions about payments at 1-888-734-6229.
What If I Can’t Make My Payment This Month?
Call customer service immediately at 1-888-734-6229 so that a counselor can review your account, make note of the situation and advise you accordingly. Some creditors may be flexible with a missed payment, while others may charge you past-due fees or drop you from the plan if you can’t make your full payment.
If you are able to make a partial payment, InCharge will work with you to prioritize which accounts to target with the funds to reduce the likelihood of late fees or other penalties. It’s also important to set a monthly budget that puts aside funds for unexpected emergencies such as car repairs or medical bills, so that they don’t get in the way of meeting your DMP obligations.
Can I Change My Payment Date?
It’s not recommended, as failing to adhere to the payment schedule outlined in the plan can result in the loss of benefits or creditors dropping you from the program. Once you enter into a DMP, creditors expect to be paid every 30 days.
If you nevertheless want to request a change in your payment date, call customer service at 1-888-734-6229 to discuss options to ensure that your payments are credited in time to avoid late fees. You’ll also want to call each of your creditors and ask them to change their due dates to correspond with your new DMP payment date.
Can I Manage My DMP Online?
Yes. In fact, scheduling automatic payments online is a good way to ensure that your payments are received by the due date and you avoid the risk of late fees or losing benefits from the debt management program. Most InCharge customers use the e-pay feature. You can manage your account and schedule automatic payments at I’m InCharge.
Although managing your program online may be more convenient, it’s also a good idea to discuss changes to your individual financial situation with a credit counselor to make sure your DPM is best suited to your budget and maximizes your chances of paying off your debt as effectively and quickly as possible. You should also discuss any problems you’re experiencing or concerns you have about making payments directly with a counselor to determine the best path forward.
Even Though I’m on a DMP, I’m Still Getting Collection Calls. How Do I Deal with Them?
Even though you have a DMP in place, you still might get collection calls. In some cases, it may take up to three consecutive on-time payments through the program before calls begin to stop. Should a creditor call, please inform them that you are working with InCharge Debt Solutions. If they call again, notify customer service at 1-888-734-6229, and a representative will contact the creditor. It’s important not to ignore any mailings or calls from your creditors, so please keep InCharge informed of any contact you have from your creditors or their collection agencies as soon as possible.
What Should I Do toward the End of My DMP?
The most important step is to ensure that you’re on track to pay off all your creditors in full when your debt management program ends. It’s a good idea to contact your creditors directly to get your final 30-day payoff balance and review your final statements to ensure that all your payments have been properly applied to the accounts in your DMP. If there is any remaining balance on any accounts once your final DMP payment is made, you’ll want to pay it off directly with the creditor and ensure that you’ve met all of their requirements to exit the plan and return to normal standing.
This is also a good time to start setting a foundation for your financial future. Getting out of debt is not the end of the road; it’s more like the beginning of another journey to build your credit rating and achieve true financial health.
Here’s a rundown of additional steps you can take to make sure the end of your DMP marks a new financial beginning:
- Pull free copies of your credit reports at www.annualcreditreport.com.
- Dispute any incorrect information with your creditors. The report will provide instructions.
- Look into obtaining a secured credit card while you are still in your DPM. You do this by depositing a small amount of money (usually between $250 and $500) into an account at a financial institution and using a secured card corresponding with the account to make payments.
- Continue to make your DMP payments on time, as this will help you to build back your credit score. As your debt dwindles, your credit score improves. And after paying off your plan balance, some creditors will remove notations that you had been on a DMP within three to six months.
About The Author
Tom Jackson focuses on writing about debt solutions for consumers struggling to make ends meet. His background includes time as a columnist for newspapers in Washington D.C., Tampa and Sacramento, Calif., where he reported and commented on everything from city and state budgets to the marketing of local businesses and how the business of professional sports impacts a city. Along the way, he has racked up state and national awards for writing, editing and design. Tom’s blogging on the 2016 election won a pair of top honors from the Florida Press Club. A University of Florida alumnus, St. Louis Cardinals fan and eager-if-haphazard golfer, Tom splits time between Tampa and Cashiers, N.C., with his wife of 40 years, college-age son, and Spencer, a yappy Shetland sheepdog.