A debt management program (PMD) is an assisted form of debt consolidation. You enroll in the program through a credit counseling agency that administers the program and negotiates with creditors on your behalf. Once you sign up, unsecured debts as your credit cards become a single monthly payment that is in accordance with the capacity of your budget. The agency negotiates to reduce or eliminate the interest rates applied to its debt, as well as to stop the penalties.
How does a debt management program work?
First, call a credit counseling agency to assess your financial situation.
The counselor will review all of your options to achieve debt relief. If a debt management program is your best option and your debts qualify, then the enrollment process will begin.
You provide a list of account numbers and creditors that you want to include, and then establish a monthly payment that you can meet according to your budget.
Then they are included in the payment of the program, the configuration and the monthly maintenance fee, which are usually around $ 69.
The credit counseling agency then contacts each of your creditors to approve the inclusion of those particular debts in the program.
During that discussion, the credit counselor also negotiates to reduce or eliminate the interest rate applied to his debt and stop all future penalties.
Once all your creditors have signed, you will be making payments in the program – you do it to the agency, and they distribute that payment among your creditors as agreed.
Since your creditors agree with the program, there is no negative credit damage created by using a correct debt management program.