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A Debt Management plan (DMP) is usually the first arrangement that organizations advertise for credit counseling options. When consumers use a DMP it means that you will be required to deposit money each month to a credit counseling organization. The credit counseling organizations use the money you deposited to pay for your student loans, credit card bills, medical bills, and other unsecured debts for the payment arrangement they have worked out with you and your creditors. Creditors can and may agree to lower interest rates or suspend certain fees if you are repaying through a DMP.

The FTC has found suspicious activities of credit counseling organizations that offer DMPs conducting deceptive and fraudulent activities such as not fulfilling monetary obligations. A recommendation for all consumers to double check their bills in order to make sure that the organization that you have consulted is conducting business in which they state they are. If you are paying a DMP contact your past or present creditors and make sure that they are have agreed with the proposed contract before sending any payments to the organization taking on your DMP. When the creditors have accepted the DMP; it is important to:

-make regular, timely payments
-read monthly statements as a priority to adhere your creditors are being paid accordingly to your plan
- contact the organization responsible for your DMP if you are unable to make your regular payment and if it is discovered that creditors are not being paid.

An important issue is to make sure that the creditors are making regular payments on time, because you could lose the progression that you have made on paying down your debt, or the perks of being on a DMP, which includes lower rates and fees waived.
Even though debtors forgave late payments before the DMP was instated, the creditors may not be willing or able to do so if payments are late after you have enrolled in a DMP. If you fall behind on your payments you may not be able to receive a “re-age” (report as current) on your current account even if you start a new DMP with a new counselor. This means that your credit report will show late marks and you will accumulate late fees, which will lead to more debt that may be longer to pay off.

The consequence of your DMP in regards to the credit counseling company that manages your debt shutting down. Your current credit counseling organization may send you a notice that your DMP is being transferred to another company. Or your counselor will inform you that you should take further action in order to keep your financial status on track. If the FTC or any government agency has filed an action against the credit counseling company in which you have employed a third party notice will be sent to you. If you come to find out that the credit counseling organization that you have a DMP with is going out of business you may want to do the following:
-notify your bank to stop payment if you have your DMP set up for ACH-automatic withdrawal
- begin making payments directly to your creditors
-contact your creditors and tell them the credit counseling organization is currently going out of business. You may be able to work out a payment plan with the creditors yourself.
-order a copy of your credit report. Check late payments, any missed DMP payments. That may result from the credit counseling organization going out of business; if you see any “late” notifications that should not be there.
What questions to ask if your credit counseling organization goes out of business or you are searching for a new organization?

1. What services do you provide?
Search for credit counseling organizations that offer a variety of services such as budget counseling, savings and debt management classes, and credit counselors who are trained and certified in consumer credit, money and debt management, and budgeting. Your counselor should explain the entirety of your financial situation to you in order to help you develop a personalized goal to render your monetary problems now and to avoid others in the future to come. Most sessions last for about an hour, which may include a follow-up session. Be aware of credit counseling organizations that are demanding on offering a DMP, debt management plan, as your only option before they thoroughly revise your financial situation. DMPs are not for everyone. You should sign up for a debt management plan only after a certified credit counselor has taken the time analyzed your financial situation, and has offered you viable advice on managing your money. If you were on a debt management plan with an organization that shut down, do an inquiry with another credit counselor on suggestions of what to do about retaining the benefits of your last debt management plan.

2. Are you licensed to offer services in the current state?
A majority of states require organizations to obtain a license before offering credit counseling, debt management plans, and like services. Do not hire an organization that has not fulfilled their requirements for your state.

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