Option #1 Debt Management

Debt Management is an option for people who are able to pay the monthly minimums payments required by their creditors but they find it very difficult. Their situation isn’t terrible but it is very tight. In a Debt Management Program (DMP), Creditors are asked to lower the cardholder’s interest rates so that more of the payment goes toward principal and less toward interest.

The Creditors may even lower the minimums a little bit. In this program, the DMP sends a proposal to the creditors requesting lower interest rates. The cardholder then makes a monthly payment to the DMP who in turn disperses the funds to each Creditor each month.

Since Creditors are receiving a payment each month, the cardholder should not experience annoying collection calls and the negative impact on their credit rating is minimal. The typical DMP length is about 5 years. If your credit rating is very important to you and it hasn’t already suffered, this may be the option for you.

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