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The two main benefits of a debt consolidation credit counseling plan are the reductions in finance charges and a reduced monthly payment that is more affordable for the client to manage monthly. While a reduction in interest is a primary long term benefit, a lower monthly payment is usually more pertinent to solving the consumer’s current credit crisis.
Some creditors have introduced new debt management plans (DMP) referred to as –Call to Action- that offer low or now interest rates to people who can qualify under extreme financial hardship. These new debt consolidation plans allow consumers to save from $25 to $200 more a month than a regular debt management plan.
But not everyone can qualify for this modified debt management plan. The criterion for enrollment into the CTA DMP is decided on a case by case basis by a certified credit counselor with the final acceptance coming from the individual creditors. A certified credit counselor helps determine a consumers eligibility for the CTA by administering a financial analysis covering sources of income, living expenses, and monthly debt obligations. This is also referred to as a budget counseling session or a household budget. If client qualifies by expressing extreme financial hardship a CTA DMP is recommended instead of a regular debt management plan.
Participating creditors, not all just yet, waive late and over limit fees and make favorable adjustments to the APR (finance charges) so that the CTA DMP will not extend longer than 60 months just like a regular debt management plan. While all creditors aside from Dell and Credit One participate in regular debt management plans not all are technically able to offer the CTA alternative.
In its infancy there have been no recorded success reports or percentages of completions under these new debt management plans but the NFCC advises that an initial review will be conducted and available by early August 2010.
Consumers who want to repay their debt through a DMP can truly benefit from this new hardship plan, especially those with a very tight monthly budget. Obviously a creditor would rather get some return than none and the efforts being put forth by banks show such as bankruptcy filings increase and creditors are reaching for new solutions.
To see if you qualify for a CTA DMP or a regular DMP speak to a certified credit counselor today for a free consultation and budget counseling session. Non Profit debt solutions are available to those serious about getting out of debt. A debt consolidation program can provide a lower monthly payment and interest reductions from 0 percent to 10 percent and have you debt free in five years or less. Speak to a certified counselor about your options and long term financial goals at 800-905-1563 or visit our website freedomdm.org and complete our application. You can also utilize our LIVE CHAT feature and speak to a live counselor online with no obligation.
