Matador Legal » DMP

Nolo advice : Refrain using DMPs

Matador Legal — Tue, 19 May 2009 14:06:21 +0000

According to an article “Stay away from Debt Management Plans” by Nolo, it is advised to be wary of companies offering Debt Management Plans (DMPs) as they have in most cases deceived and defrauded consumers by not making payments to the creditors as per the plan. It is suggested that instead of using these DMPs to pay off one’s creditors, it is wiser to file for Bankruptcy under the Chapter 13 plan and divert as much money as possible towards repaying creditors.

Source:

http://www.bankruptcyforeclosureblog.com/2009/05/stay-away-from-debt-management.html

What are the alternatives to Bankruptcy

Matador Legal — Tue, 12 May 2009 16:20:58 +0000

In one of our earlier posts, we have discussed a Debt Management plan V/s a consumer bankruptcy. Here, we delve a bit more into the Debt Management plan (DMP) .

In a DMP a debtor usually becomes free of credit card loans and can save up to 65% of original balances.

How does a DMP work?

A debtor has to understand that a DMP is an informal arrangement with the creditors, in consultation with a mediator. The creditors have a right to agree to or modify the plan. THe creditors can impose clauses like annual appraisal of a debtor’s financial health.

What kind of debts are included?

Only unsecured debts are included. Unsecured debts are those which are neither hypothecated or mortgaged against a security like a home, car, shares etc.

Does it get reflected on the credit reports?

As long as a debtor is on a DMP, it will reflect on a credit rating agency’s report.

Sources :

http://www.pitchengine.com/firstchoicedebtresolution/debt-settlement-with-first-choice-debt-resolution/11140/

http://en.wikipedia.org/wiki/Debt_management_plan

Debt management plan( DMP) V/s Bankruptcy filing

Matador Legal — Wed, 06 May 2009 17:54:11 +0000

Steve Bucci, from bankrate.com explains when an individual should opt for a Debt Management Plan ( DMP) or a Bankruptcy. In a DMO, the debtor, the creditors and a credit counselor work out a proposal where the budget is developed after accounting for allactual expenses. The disposable income is reallocated to the creditors, with a credit counselling agency , acting as an intermediary.

A DMP stays on the FICO score till an individual is on the paln, while a chapter 7 Bankruptcy stays for 10 years, while Chapter 13 stays on the FICO for 7 years.

Source:

http://www.scrippsnews.com/node/42915