Should I cancel credit cards when in a debt management program?

It really depends on the program. Some will advise that you stop paying and then settle once they send a final bill, orthers will request that you cancel right away. Of course to cancel they would request that your balence be paid off in full.

Good luck.

The guy I talked to who was attempting to enroll me into a DMP late last week mentioned that the (4) credit card accounts will be closed--i.e.: I wouldn't be able to use them for purchases. But we didn't get to that point, since I didn't qualify for the DMP.

can someone define debt management ? this phrase works great with creditors but what affect does it really help with people in debt ? and also what game plan does "debt management" provide ?

Basically, debt management is a debt assistance program in which a debt management company or credit counseling agency helps you to pay off your debt through negotiations with your creditors.

Debt management plans / programs (DMP)???s are provided by debt management companies or credit counseling agencies. It is a simple budgeting plan which helps you to pay off your debts. The company negotiates on your behalf and you???re benefited in several ways.

DMP includes medical bills, credit card bills, pay day loans, students loans and lots more.

In a DMP firstly your interest rates and payments are reduced. Then late fees or over- limit- charges are waived off.

The debt management help company analyzes and evaluates your current financial situation.

After enrolling for debt management services, the company starts negotiating with your creditors for reducing the interest rates payments.

The company works out for a repayment plan of your affordability. Then late fees or over- limit- charges are waived off.

You can get rid of unwanted collection calls.Moreover, you can opt for single monthly plans in lieu of multiple bills.

While in DMP, the credit report shows that payments are being made through a debt management help company or credit counseling agency.

Hope this will help you.

As a general rule, you agreed to close your credit cards when entering debt management plan programs. You cant get your debt under control if you keep charging.

Canceling your cards is a good idea, I agree that you can't get out of debt if you still have the temptation and "funds" to keep charging.

-Edward Carlton, IFC NOW

Usually the DM company tells you to cancel them; however, credit card companies will usually cancel them if you're in a DMP. I cancelled mine when I entered Take Charge America. I have only one credit card, an AMEX for $500 to use when I make a reservation for accommodations on vacation, etc.

In a nutshell -

Debt Management Plans - not to be confused with Debt Settlement/Negotiations. DMP's are traditional "payment plans" under credit counseling. They will involve you paying back the principal balance at a reduced interest rate. Creditors do not have to participate (although most will). Companies that offer DMP's will charge a small set up and monthly fee (in most cases) and will receive a % of whatever they are sending to your creditors as a 'fair share', usually around 3-8% depending on the company size, etc.

In order to participate in a DMP, yes, you will usually have your cards canceled (while you are in the program) - you may usually keep 1 card with a low balance for work purposes. Creditors aren't too keen on letting you continue to charge on other cards or keep them in good standing while they are accepting less that what is contractually owed. You must be able to afford the monthly program payment. You usually can not be past charge-off or in collections (although that varies from creditor to creditor).

Most interest rate reductions are usually pre-negotiated.

Debt Settlement is when you offer a creditor a lump sum to settle for less that what was owed. For example - you owed Amex 15k and you offered them 6k to satisfy your obligation to them. A DS company will usually charge you anywhere from 10% to 15% of the debt under management and a good part of it will be paid during the first several months of the program. If you dont have the money available to settle with your creditor, then you will have to start saving money each month until there has been enough reserves built up to offer a settlement. Most creditors will not take payments on a settlement (maybe 3 - 6 payments depending on the size of the debt) and will demand the settlement payment in full (which makes sense, if you wanted to make monthly payments, then they would ask you just to continue to make those monthly payments until you were back on track). When you offer a settlement, you get the break of paying less than the balance owed and the creditor gets something collected right away and the rest of the debt off their books. Anyone that is current on their payments or that can afford to make their payments should look at trying to pay the debts off on their own (using a snowball or rollup method - making the same continuous monthly payment instead of whatever the minimum the bank is asking for each month - If you can't do that then look into cccs/dmp, debt settlement or bk. You should explore each of your options = they all have good and bad points attached - you can also do them yourself or hire someone.

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I forgot to sign in. This is Mike @ Debt Management Guys explaining that last boa guideline for dmp plans.

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I was called by a Swan Financial company to lower my interest rates, they called B of A to transfer funds from 2 of my B of A cards to 3 non B of A cards, to pay them off. that was done. Then the B of A rep. said that if we wanted to lower the interest rates on those cards we had to call another rep. that done the new B of A rep said that they would not lower the rate, and that she cancelled the transfers (which I'm glad now that she did) but she also lowered my credit limit to the balance owing on my two B of A cards. The total that was going to be transferred came to about $6,700. The person trying to help me got into a big arguement with B of A rep. and demanded to talk to her super. The super came on and said she couldn't do anything about it. Now I'm afraid I'm in trouble with B of A, I've been with them since 1958. The person helping me said said hold on and put me on hold. When he came back, he said we had to go to a whole new program called DMP Management. Calling it a debt restructuring program through the Federal Government. And that mean't I had to close out all my cards ( I really don't want to do that). He then put me into contact with a legal assistant from The Consumer Law Group, P.A., located in Boca Raton, FL whom asked me more questions. Both these companies have my card #'s (5) and SS #, checking acct #, home address. The guy from TCLG sent me by fax the contracts to be signed. Also a sheet from a company called American Credit Counselors Inc., which is a Client Authorization form to fill out. This all happened on Wednesday, June 9, 2010. I'm nervous about this whole deal. I put a lock on our credit report. Please let me know if anyone has any info on these companies. I read some pretty unsettling reports on line about the Boca Raton business. Need some input!

Ok - first off, THERE IS NO GOVERNMENT PROGRAM FOR CREDIT CARD DEBT RESTRUCTURING. PERIOD. A DMP is really just credit counseling (cccs). In order to participate in cccs BofA will require you to include all of your credit card debt - even credit card debt not related to them. Your creditors will normally lower your interest rates. You will make 1 monthly payment to your cccs company and they will disburse that payment to your creditors. You may normally be able to keep 1 card with a small balance for emergencies or if you need it for business travel, etc. So, if you want to get out of debt using cccs - you can go online to www.nfcc.org and find a company. However, credit counseling programs are pretty straight forward - you can use American Credit Counselors but I willing to bet you that you will be making a payment to TCLG (most likely equal to the first payment) for them setting you up in the program. You don't need to do this. You can go to a credit counseling company directly using the nfcc website and avoid this payment. However, if you felt that the company was actually providing a good service, there is no reason why you couldn't continue. But, it seems to me that they are pushing you into something without your full understanding and as such, I would continue to do more research. What is it specifically that you want to accomplish with your debt?