Step-by-Step: Enroll in the InCharge Debt Management Program

Are you ready to get help with paying off your debt? InCharge’s Debt Management Plan (DMP) might be just the answer you’re looking for.

When you enroll in a DMP through InCharge, you’ll get one-on-one counseling from our certified counselors. As part of the set-up process, your counselor will review your full financial situation, offer personalized strategies and tips, and can even help you reduce the interest rates on your credit card debt. Here’s how it works.

What Is a Debt Management Program and How It Works

A debt management plan (DMP) is a special program that nonprofit credit counseling agencies offer to help you pay off debt.

In order for you to enroll in a DMP, a credit counselor will have to review your finances and debt to determine if you’re a good candidate for debt management.

If you are a good candidate and choose to enroll, the counselor will work with your creditors to set up the terms for your DMP. Depending on your creditors, the plan can potentially include all of your credit card accounts and some loans and medical debt.

With a DMP, you’ll make a single monthly payment to the counseling agency, and that payment is then distributed to your creditors. Most DMPs take 3-5 years to complete, which is usually faster than you can pay off the qualifying debt on your own.

What are some of the other benefits? Your creditors may agree to reduce your interest rates to around 8%, lowering your payments. They also could waive late fees.

Completing a DMP can have a major impact on improving your credit scores. Unfortunately, the same thing cannot be said for alternatives such as bankruptcy or for-profit debt settlement.

It’s important to understand how a debt management plan compares to other options. Debt consolidation usually involves taking out a new loan to combine debts, which may require good credit and can add to what you pay over time.

Debt settlement, often offered by for-profit companies, involves negotiating to pay less than what you owe, but it can damage your credit and may come with tax consequences. A debt management plan, by contrast, focuses on repaying what you owe with reduced interest rates and structured payments, helping you get out of debt in a more predictable way.

Preparing for Your First Credit Counseling Session

Your first credit counseling session will last 40-60 minutes, depending on the complexity of your situation. It will involve a thorough review of your income, expenses, and debt information. Without this assessment, your counselor would not be able to make proper recommendations for how to improve your situation.

Want to get the most out of the appointment? Do some preparation in advance. If possible, try to gather a list of your monthly expenses. Take a look at your bank and credit card statements to make sure you don’t miss anything.

You’ll also want to have the following documents handy:

• Three most recent pay stubs
• Your most recent credit card statement for each card
• Your most recent loan statement for each loan

Most credit counseling agencies can pull your credit reports during your session to confirm information about your debt. However, if you need to gather anything else before an appointment, your credit counselor will let you know.

Choose Which Creditors You Would Like to Include in Your DMP

It’s in your best interest to add every eligible debt account to your DMP, but some of your debt might not be included. There are a few reasons this happens.

For starters, you can choose to keep specific accounts off the plan if you want to work with the creditor directly. Just know that even if you decide to exclude some of your credit cards, your creditors may choose to close the accounts once they find out you’re on a DMP.

Additionally, some creditors may refuse to participate. If this is the case, you can continue making your monthly payments directly to them, separate from the DMP.

Finally, there are some types of debt that aren’t eligible to be included on a DMP. While there are occasional exceptions, here’s what typically can and can’t be included:

• Qualifying debt: Credit cards, personal loans, and medical debt.
• Non-qualifying debt: Student loans and debt with collateral, such as car loans and mortgages.

What to Say When Debt Collectors Call

Some people might still receive calls from debt collectors or creditors after you enroll in a DMP.

Why does this happen? Because some companies will keep attempting to collect the debt from you until you’ve made at least three on-time payments on your DMP.

If a creditor does call or send you mail after you start your DMP, don’t ignore it. Be sure to exercise your rights as a consumer by asking them to validate any debt you’re unfamiliar with, and documenting what they tell you.

Make sure to inform them that you’re working with InCharge Debt Solutions, too. Then, follow up by telling your counselor about the interaction ASAP, so they can resolve the issue directly with the creditor if needed.

Under federal law, debt collectors are required to send a validation notice within five days of first contact outlining the amount owed and your rights. They are also limited in how and when they can contact you, including restrictions on calling at inconvenient times or using harassing tactics.

Why Are Certified Credit Counselors Important?

It might seem like all credit counselors are the same, but that’s definitely not the case.

If you hire a for-profit credit counseling company, a credit repair agency or debt settlement company, your “counselor” or customer service rep may not have any training on financial matters. In fact, they may be trained to push you to enroll in a DMP, or to pay for expensive services, without asking you any questions about your situation.

So when you’re looking for professional help, it’s imperative to choose a reputable counselor who works with a nonprofit credit counseling agency. According to the Consumer Financial Protection Bureau, you should choose an agency that’s affiliated with one of the following organizations:

• National Foundation for Credit Counseling (NFCC)
• Financial Counseling Association of America (FCAA)

Fortunately, you don’t have to look any further! InCharge is a member of the NFCC, and all of our counselors are NFCC-certified. That means that each one must pass the counselor certification exam, which includes testing on subjects ranging from consumer rights to bankruptcy. They also have to participate in ongoing education to maintain certification.

Additionally, our credit counselors are certified through the Institute for Financial Literacy (IFL) and the Association for Financial Counseling, Planning and Education (AFCPE). Our housing counselors are also certified through the National Council of La Raza (NCLR) and NeighborWorks America.

Is Counseling Confidential?

Credit counseling sessions with InCharge are completely confidential. InCharge is serious about keeping your information private and secure, and our Client Bill of Rights guarantees that the information you discuss with your credit counselor will only be shared with other individuals or creditors if you give your written permission.

InCharge also uses secure systems and internal safeguards designed to protect your personal and financial information. As a nonprofit credit counseling agency, InCharge follows industry standards and applicable privacy laws to help ensure your data is handled responsibly.

Will InCharge Report Financial Information to the IRS or Credit Reporting Agencies?

InCharge does not report your financial information to the IRS or any of the major credit reporting agencies (Experian, Equifax, or TransUnion).

Note that your creditors may report your DMP status to the credit bureaus, and your credit scores may be impacted as a result.

You can typically expect to see a short-term drop in your credit scores after you enroll in a DMP, as a result of having your debt accounts closed. However, as you make on-time payments and reduce your debt balances, you’ll likely see significant improvements to your credit scores.

Pros and Cons of the InCharge Debt Management Program

A DMP isn’t necessarily a quick fix for your debt issues. It typically takes 3-5 years. But for many people, enrolling on a DMP with a nonprofit credit counseling agency is the best path to becoming debt free.

Here are the main advantages and disadvantages of participating in these plans.

Pros

• Have a plan for when and how you’re going to be debt free
• Credit card interest rates can be lowered to around 8%
• Consolidate multiple debts into one monthly payment
• Potential to have past fees forgiven by creditors
• Long-term improvements to your credit scores
• Access to high-quality credit counseling
• Avoid filing bankruptcy

Cons

• 3-5 year commitment
• Requirement to close some or all of your credit cards
• Some creditors may refuse to participate
• Short-term loss of points from your credit scores
• Average enrollment fee is $52 and average monthly fee is $34 (some people may qualify for income-based fee waivers)

What Happens Once You Have Enrolled in the InCharge DMP?

Once you enroll in a DMP, you’ll begin a repayment plan for your debt that typically lasts 3-5 years. Here’s a rough overview of how the process works:

1. Your counselor will work with your creditors to determine your new, affordable monthly payment amounts and interest rates, often as low as 8%. Some of the new terms may not kick in until you’ve made three on-time payments on your DMP.
2. All accounts included in your DMP will be closed.
3. You’ll send one payment to InCharge each month to cover your debt payments and any DMP fees.
4. InCharge will distribute payments to your creditors each month until your DMP is completed.
5. You can log into your online InCharge account at any time to track your payments and balances.
6. Your counselor may also check in periodically and help address any changes in your financial situation.

It’s worth repeating here that some creditors require participants in a DMP to close all of their credit card accounts. If you open any new credit cards before the end of the program, you risk being kicked off of the plan.

Alternatives If a Debt Management Program Isn’t Right for You

If you’re overwhelmed by debt, a DMP isn’t necessarily the only solution. DMPs are best for people whose main issue is paying credit card debt on time. Depending on your situation, your credit counselor might recommend one of these alternatives over a DMP:

• Debt snowball or avalanche: Your counselor can walk you through the debt snowball and debt avalanche methods for paying off debt. These are strategies that help you prioritize which debt to pay off first, so you can save money on interest, pay off accounts faster, or both.
• Debt consolidation loan: If your credit is good, you might qualify for a consolidation loan, which is a personal loan you use to pay off your old debt and reduce your interest rates.
• Nonprofit debt settlement: If you’re behind on your debt payments, you can potentially use InCharge’s Credit Card Debt Forgiveness program to settle the debt by paying 50%-60% of what you owe. You’ll have to make monthly payments for 36 months, but there are no interest charges and forgiveness is guaranteed at the end of the program.
• Bankruptcy: If there’s no way you can reasonably afford to pay off your debt within the next few years, bankruptcy might be the only answer. While bankruptcy does serious damage to your credit scores, a certified credit counselor can help you understand how this could help you get back on your feet financially.