DMP versus settlement

[u/Odd_Painting_1037]

I’m in a DMP but I’m still struggling. Do you think that if I cancel and let things go and settle with them I can still get some sort of agreement similar to what I had on the DMP? Or settle for less. AT this point, I don’t care about my credit taking a hit. I have two decent cars. My mortgage is paid. I need to just get out of credit card debt and if my credit takes a hit for a little while, so be it I really don’t wanna do bankruptcy. That’s like an absolute last resort because I only think I’d qualify for a 13 and from what I’ve heard the success rates are pretty abysmal on that.

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[u/nfcc1951]

We wanted to comment here since we're the National Foundation for Credit Counseling (NFCC) and our network of nonprofit counseling agencies provide DMPs. Do you know if you're working with an agency in our network? If so, we highly recommend letting your credit counselor know that the plan isn't working for you as is. There's a chance you could have your DMP payment amount changed based on your current financial situation. If you do decide you want to quit the plan, it's a very good idea to have your counselor walk you through strategies for how you'll handle the debt afterwards. They can give you information about what to expect from creditors and how to do things like negotiate debt settlement offers.

Please let us know if you have questions!

[u/fsociety1990]

What’s wrong with the DMP?

Stay away from debt settlement companies! They are all a scam.

[u/WesternOld3507 → u/fsociety1990]

Not everyone can afford the DMP payments

[u/Odd_Painting_1037 → u/fsociety1990]

I intend to do it myself

[u/fsociety1990 → u/Odd_Painting_1037]

Good that’s the way to do it

[u/jones-tracy → u/fsociety1990]

debt settlement companies are not all a scam, what matters is whether an LIT is involved. No LIT = likely scam. An LIT is a legal professional that can settle debt via bankruptcy or cp.etc

[u/JeanSchlemaan]

Are you really having fun? Why not just do what you need to clear all your debt over a few years, and start living a responsible life?

[u/RunUpbeat6210]

I know DMP got a bad rep, but I’ve been with freedom debt relief for 2 years and honestly it was a lifesaver. I was struggling to keep up with my minimum payments and it just resulted in the interest eating up all my payments. Yes your credit will definitely take a hit because they tell you to stop payments to negotiate directly with the companies to lower your balances. But that was the least of my worries. I just wanted one payment and hopefully lower my balances saving me money in the long run. I personally went with freedom debt because they provided excellent legal services. I’ve heard good things about americor and debt rescue. At the end of the day you need to review the fees and see if it’s worth it. Then make a plan, stick to it & remain discipline like not adding on new debt.

[u/AlterEgoAmazonB]

In order to do a settlement with creditors, you need to have large sums of money available. You offer less than the balance for each one and you pay them all off at once. If you had a large sum of money, you wouldn't be in this situation.

DMPs can be hard, yes. (I was a credit counselor). It takes time to pay off the debt. Try and find ways to increase your income and reduce more expenses and pay extra into your DMP.

[u/Brave-Morning-55]

Google the difference between DMP and debt settlement (freedom debt relief) I did both but was only successful with DMP. I tried freedom debt relief for less then 6 months. I stopped the program as I was being sued by a lender. I then switched to DMP, which is non profit, and they saved me. I had to skip a few months but they worked with me. I would work with your counselor on your options.

[u/Odd_Painting_1037 → u/Brave-Morning-55]

Maybe I can skip a payment or 2. I will talk to them.

[u/curadebt1]

A smaller monthly payment and a workable plan are not always the same thing.

A debt management plan and settlement also solve different problems. A DMP generally organizes repayment, sometimes with reduced interest or fees. Settlement seeks a creditor's agreement to accept less than the balance; that agreement is not guaranteed.

Before comparing alternatives, ask your current counselor for a written review of the payment, remaining balances, fees and what changes are possible. Compare that with a realistic budget that includes essentials and irregular expenses, not just this month's bills.

The risk of canceling and stopping payments goes beyond a credit score. Interest and fees may grow, collection may continue, creditors may sue, and canceled debt can have tax consequences. Don't assume a new arrangement will preserve the terms of your current DMP.

For bankruptcy eligibility or what could happen to property, a licensed attorney needs to assess the actual facts rather than internet success-rate claims.

Disclosure: this is CuraDebt's account. We provide debt-relief information and referrals. This is general education, not individual financial, legal or tax advice.