So, you've decided to get credit counselling help and you are now in a Debt Management program. Prior to this you had a small number of creditors e.g. credit card companies and they should now be dealing with your credit counsellor.
But does it really work that way?
Will creditors still contact me?
Once creditors start to receive regular payments, they should stop trying to contact you. If they continue to call after you are enrolled in the debt management program, do not refuse to talk to them. Instead, you should advise them to contact your credit counsellor who is handling your debt management plan.
Some creditor may tell you that they do not accept payments from the credit counsellor but it's highly likely they are only doing this to intimidate you but don't worry. Each and every creditor who agrees to the debt management program should abide by the agreed terms. The majority of creditors will be happy to receive the payments but there will always be a few who continue to work on the edge of the agreed debt management plan.
Also, it's likely that you will continue to receive routine letters from your creditors during the first few months of the DMP. Don't worry, as most of these letters are computer generated so you can generally ignore them. However, be careful as there maybe one letter concerning legal action or regarding the transfer of your account from one creditor to another.
Will creditors stop the finance charges?
Under a DMP many creditors agree to reduce or even stop your finance charges. Also, creditors that initially agree to stop or reduce charges or late fees are likely to resume the charges if you miss any payments. So you must ensure you keep on top of payments and if at any stage you feel that a payment may be missed then contact your credit counsellor ASAP so he can notify the creditors and agree a change in date if possible.
Will I still receive statements from creditors?
Usually you will continue to receive monthly statements. When you receive your monthly statement from your credit counsellor, you should compare it to the statements from your creditors. It is essential to monitor the creditor st atements to ensure interest and late fee concessions are obtained, an d balances are the same as on your credit counsellor statement, and payments are posted correctly. Your credit counsellor will also keep an eye on your balance but it's always best for you to make sure everything is in order.
Should I worry about legal action while on a DMP?
In general your creditors prefer to receive regular payments from the credit counsellor rather than taking people to court. Many will be more than happy to stop legal action or hold judgments in suspension if they are receiving regular payments.
However, some creditors may lose patience and decide to take legal action. If you receive a court summons, you need to follow all instructions of the court. But more importantly you should contact your counsellor so they can help you negotiate with the creditor and stop any legal action.
Paul Hockney is an online loan expert who provides debt management program tips and advice.
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