Common Questions on Debt Management Plans
- April 4, 2023
- By: Greenpath Financial Wellness
Here at GreenPath, we receive a lot of questions when it comes to Debt Management PlansDebt Management Plans (DMPs)—how they are set up, what the process looks like on our side, and the ways debt management can impact your overall financial picture. We’re wholehearted believers that educating yourself is the first step towards building healthy money habits, so we’ve rounded up several questions that our counselors hear most often.
How do I know the Debt Management Plan is not a scam?
GreenPath is a highly-rated national nonprofit and a neutral third party—we don’t work for banks. GreenPath’s caring counselors helped individuals pay off more than $185 million in debt in 2022 alone. Creditors support our mission because they share our belief that Debt Management Plans result in positive, long-term outcomes. Our clients often tell us they wish they found us sooner and provide many positive referencesprovide many positive references.
Why do I need to close my credit card accounts?
Closing your credit cards feels like a serious step. And it is! But in a positive direction. The goal of a Debt Management Plan is to eliminate your debt, and the process begins with closing the credit cards included in your plan (although many creditors will usually allow you to continue using one card for emergencies and travel.) Generally, once creditors agree to the program, collection calls will stop, and you’ll see your balances decrease. We may be able to lower your current interest rates and monthly payments so that you can pay off debt faster and save money.
How much does enrollment cost?
GreenPath’s management fees (disclosed up front, prior to enrollment) are calculated based on what state you live in and the amount of debt you carry when you enroll in a Debt Management Plan. We charge a one-time setup fee that ranges from $0 to $50 and a monthly fee that ranges from $0 to $75, but this is minimal when you consider the amount of money you will be saving in waived late fees, waived over limit fees, and reduced credit card interest charges across time.
Will a Debt Management Plan hurt my credit score and history?
When you enroll in a Debt Management Plan, GreenPath does not notify or report to credit bureaus (Experian, TransUnion, or Equifax.) You may see a temporary dip in your credit scorecredit score initially, but here’s the good news: over time many people see their scores increase. When creditors work with us and accept proposals, they typically report on-time payments to the bureaus, which positively impacts your credit history.
Why can’t I just do this on my own?
In recognition of GreenPath’s established reputation (and in seeing the positive impact of our work) creditors are more eager to work with us. They understand that we provide guidance for individuals enrolled in a Debt Management Plan and, in turn, are more inclined to offer excellent concessions that may not be available without our assistance.
My Debt Management Plan is taking a long time…why am I not seeing faster results?
There is no one-size-fits-all approach when it comes to paying off debt. The duration of time depends on how much debt you have when you enroll with GreenPath. Generally, most plans are completed in three to five years. While results don’t happen overnight, you can take comfort in knowing that you’ve made a proactive step towards shaping healthy financial habits: 89% of people who have completed our Debt Management Plan report improved spending habits.
What happens if I have a financial emergency or need to change my plan?
We understand that life happens. We can’t always predict sudden fluctuations in our financial picture, and for this reason, we have a Client Success Team solely dedicated to your success in the program. We pride ourselves on being empathetic and innovative, and we’re confident that most bumps in the road can be overcome by working together to help you achieve your goals.
Still have questions? We can answer them.
If you’re already signed up for a Debt Management Plan, you also have access to a private online community of others who are currently paying off their debt and working towards financial wellness. This is a great place to ask more questions, share advice, and receive moral support.
“I had a good experience with GreenPath. It was an easy process to get started. They were also flexible and they gave me a plan that I was comfortable with, so it was a good thing.”
Carol | Oklahoma City, OK via ConsumerAffairs.com
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