Reputable credit counseling organizations employ counselors who are certified and trained in consumer credit, debt management and budgeting.

Non-profit organizations have a legal obligation to provide education and counseling. Be aware not all credit-counseling organizations provide these services.

Some charge undisclosed high fees or urge people to make voluntary contributions that cause even more debt. Many claim a debt management plan is the only option before they spend time reviewing a person’s financial situation, and offer little or no consumer education.

Must–dos for DMPs

In a Debt Management Plan, monthly deposits are made with a credit counseling organization. The organization uses these deposits to pay an individual’s credit card bills, student loans, medical bills or other unsecured debts.

Creditors may agree to lower interest rates or waive certain fees if repaying through a DMP.

When paying through a DMP, contact all creditors and confirm they have accepted the proposed plan before sending any payments to the organization handling the DMP. Once the creditors have accepted the DMP, it is important to:

-Make regular, timely payments.

-Read the monthly statements promptly.

-Contact the organization responsible for the DMP if unable to make a scheduled payment, or upon discovery that creditors are not being paid.

If payments to the DMP and creditors are late, any progress made in paying down debt, or the benefits of being in a DMP, is lost.

Although creditors may have forgiven late payments made before, the creditors may be unwilling or unable to do so in a DMP. If anyone gets behind on payments, the accounts may not be “re-aged” again (reported as current), even if a new DMP is started with a new counselor.