A credit counseling agency may be able to assist you in understanding how to manage your debts. It may also set up payment plans with your creditors that are easier for you to afford than what you are currently paying. Credit counseling services, however, are not free, and the service may include DMP (or Debt Management Plan) fees.
Facts
DMP fees are levied if you are assigned a debt management program by your credit counseling agency.
Function
A credit counseling company charges a DMP fee to negotiate with your creditors to lower your interest rates or balances. The DMP fee also covers the service of allocating payments to your creditors.
Features
A credit counseling service may charge an initial DMP fee to set up an account and then a recurring DMP fee each month for the bill payment service it provides.
Considerations
Not everyone who seeks credit counseling will be assigned a debt management program. You should always check to make sure you are not mistakenly being charged a DMP fee if you are not enrolled in a debt management program.
Warning
The Federal Trade Commission warns that credit counseling agencies that charge high fees for their services may be participating in unethical business practices. It urges all consumers to seek credit counseling through government-approved credit counseling agencies.
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