08 May What Happens to My Debt Management Plan if My Credit Counselor Goes Out of Business?
If you are currently participating in a debt management plan (DMP), you must read the following article by the Federal Trade Commission regarding what to do if the company administering your DMP goes out of business:
What happens to your DMP if the credit counseling company that managed your debts shuts down? A counseling agency that is going out of business may send you a notice telling you that your DMP is being transferred to another company. Or it may tell you that you need to take some action to keep your financial recovery on track. If a government agency has filed an action against your credit counseling company, you may get a notice from a third party. If you discover that the organization handling your DMP is going out of business you need to:
- contact your bank to stop payment if you are making your DMP payments through automatic withdrawal.
- start paying your bills directly to your creditors.
- notify your creditors that the organization handling your DMP is going out of business. Consider working out a payment plan with your creditors yourself. Ask if they will give you a reduction on your interest rate without a DMP.
- order a copy of your credit report. Check for late payments — or missed DMP payments — that may result from the company going out of business. If you see “late” notations you don’t expect, call the creditor immediately and ask that the notation be removed. Understand that they have no obligation to do it.
If payments are late because the organization handling your DMP has failed to make scheduled payments, the consequences can be just as devastating as if you failed to make payments to the DMP. If you do not act quickly to make arrangements with your creditors, you could incur late charges that increase your debt, lose the lower interest rates associated with the DMP, and have “late” marks on your credit report.
If you have been the victim of a bad debt settlement/management company, you should contact an experienced consumer lawyer to discuss your options.
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