What are the risks of a DMP?

  1. They’re rigid and inflexible. If you miss a payment, the plan is typically over. So for example, you could spend 2 years on the plan and miss one payment and have it go back to the original interest rates.
  2. Accounts enrolled in the plan will be closed. This means that when the DMP is over, while the debt is paid and your overall debt to income is lower, closing an account impacts your age of credit. If you had an account that was open for 20 years and it’s closed as a result of your DMP, you will have to rebuild your credit. However, you can still be added to someone else’s account as an authorized user. If they have a 20 year old account, that age of credit will be transferred over to you and you can get those benefits. It is also often possible to keep a credit card out of your DMP, which can help you not have to rebuild as much revolving credit when your DMP is complete.
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