Is joining a debt management program the same as filing for bankruptcy?
Is joining a debt management program the same as filing for bankruptcy?
Debt management programs (DMPs) are a way to consolidate your debt and make one monthly payment each month. They’re often seen as a last-ditch effort to pay off debt before filing for bankruptcy. So are they the same?
Not exactly. Both involve paying off your debts over time, but filing for bankruptcy can also erase some of your existing debt and give you a fresh financial start with a clean slate.
A DMP is an option if you have good credit, and you can afford to make at least the minimum payments on all of your debts. A DMP will stop creditors from calling you and coming after you for nonpayment of your bills, but it won’t erase any of your debt—you’ll still owe it all back once the program is over.
Payoff programs work with the creditors on your debt, and they negotiate with them to lower the interest rates on your accounts or extend their terms so you can pay them off at a more manageable pace. If you're unemployed or underemployed, it isn't likely that any program will be able to get creditors to lower interest rates or adjust payment plans until you've got a steady income again.
If you have any questions or need a Bankruptcy Lawyer, please call this law firm for a free consultation.
Ascent Law LLC
8833 S Redwood Road Suite C
West Jordan UT 84088
(801) 676-5506
