In contrast to debt settlement, debt management can actually improve your credit scores. Though applying a debt management plan doesn’t impact your credit score directly. Your debt payments are regularized through an organized channel. Overall, debts are significantly reduced over time and paid off substantially faster. Timely payments, changes in utilization rate, closed accounts, and smaller amounts owed – these factors can affect your credit score in both positive and negative ways.
Can I change my debt management company?
A DMP is not strictly a legally binding contract. Hence if you decide to stop using your current debt management provider’s services, there is no legal obligation to you. You can switch providers or do it yourself – as you wish. However, be fully aware of your debt situation before hand.
Will a debt management plan affect my mortgage?
Debt management affects your mortgage payments but in a positive way. Debt Management Plans (DMP) generally cover unsecured liabilities. As your payments for these credits are lowered under the DMP, you get freer to pay for your necessary expenses, like utilities, food, health, and mortgages. The DMP also asserts better control on uncalculated spending, as you know exactly how much to pay whom and on which date.
A debt management plan (DMP) is an informal agreement. So it’s up to you if you want to add more loans to it. This is not uncommon as there are instances where people may miss creditors, or more money was borrowed after the DMP was created. While adding new loans, remember to re-adjust your monthly payments to include the newly added creditors.