Is debt reduction services legitimate?

Debt Reduction Services is a nonprofit organization who is licensed to offer debt relief assistance in all 50 states. This company offers services like credit counseling and debt consolidation, yet their main relief option comes in the form of debt management plans, or DMPs.

What does a debt management program do?

A debt management plan helps eliminate credit card debt without taking out a loan. Debt management plans consolidate debt, may reduce interest rates and provide affordable monthly payments based on your budget.

What is the catch with debt relief program?

Interest and fees continue to accrue: If you enter a debt settlement program, your accounts will become or stay delinquent, which will result in additional interest and late fees. If you don’t stick with the program to completion or if National can’t negotiate a settlement, you may end up stuck with the higher balance.

What are the risks of debt consolidation?

The biggest risks associated with debt consolidation include credit score damage, fees, the potential to not receive low enough rates, and the possibility of losing any collateral you put up. Another danger of debt consolidation is winding up with more debt than you start with, if you’re not careful.

Does DMP affect credit rating?

A DMP could affect your credit rating, even if your creditors are happy to accept the DMP. However, once each debt is cleared, they’ll eventually drop off your credit file. Once you’re on a DMP, most creditors will agree to stop interest and charges as a gesture of goodwill.

Do most creditors accept DMP?

If you’re in debt are struggling to pay it back, then a Debt Management Plan (DMP) can be an effective way of taking care of it. However, like most debt solutions, your creditors aren’t under any obligation to accept your DMP.

How long does debt management stay on your credit?

six years
How long does a DMP stay on a credit file? Details of court action, defaults, partial payments and missed payments are recorded for six years. They are removed six years from the date it happened, even if the debt hasn’t been fully repaid. When your DMP ends you can improve your credit score by using credit sensibly.