If you’ve tried repaying your debts on your own without much progress, your next step should include contacting a nonprofit credit counseling agency like Money Fit.
Benefits of a DMP
- Lower APRs: Typically between 2% and 8%
- Lower Monthly Payments
- No direct effect on your credit rating: FICO acknowledges this fact here
- Debt-free in 5 years or less
Considerations
- Fees: Credit counseling agencies do charge reasonable fees, regulate and capped by each state.
- Timing: The 2005 BAPCPA federal law requires anyone seeking bankruptcy protection to first meet with a nonprofit credit counseling agency, so talk to a credit counseling agency now if you’re at all considering bankruptcy.
- Debt Types: Credit counseling agencies can help with most types of unsecured debts but not usually with mortgage and car/truck loans.
