The full explanation
The plan does not erase your debts: it aims to lower your total monthly payment, for example with more time to repay or lower interest rates, if your creditors agree. The organization may charge fees. Before you send any money, the CFPB recommends confirming with your creditors that they accepted the plan.
An example
Patricia has several credit cards with late payments. A nonprofit credit counseling agency reviews her budget and proposes a debt management plan. Before the first payment, Patricia calls each creditor to confirm it accepted the plan.
You will see it in…
- A credit counseling agency's proposal and agreement
- Letters from your creditors accepting the plan
- The list of approved credit counselors published by the Department of Justice
