PA-FEC 7: Debt Management Plans
The agency works with the client to develop and manage a debt management plan to satisfy creditor obligations, and resolve the client’s financial problems.
Note: DMPs are developed for clients based on their needs.
NA The agency does not provide debt management plans.
The client participates in the development of a DMP that includes:
- permission to contact client’s creditors to verify obligations and negotiate adjustments and payment schedules; and
- a payment schedule and budget for the repayment period.
- reflect the client’s best efforts to repay debts he or she currently can afford;
- are established for no longer than 60 months without management approval or as provided by state law; and
- advise the client to close all lines of credit and refrain from obtaining future credit without consulting with the agency.
Based on individual client needs, the agency may advise the client to retain one active credit card in good standing for emergency situations.
Clients receive and sign written materials from the agency that disclose:
- whether DMPs are used for secured, unsecured, or both forms of debt; and
- the dual role DMPs serve in helping clients repay debts and creditors receive monies owed to them.
Written materials disclose:
- client responsibilities;
- an enumeration of debts included in the plan and the proposed payment for each creditor;
- the total debt owed as disclosed by the client, and the total DMP debt; and
- the agency's procedures for sending proposals to creditors.
Written materials also disclose:
- that a creditor’s contribution to the agency, if any, will not affect the agency’s willingness to work with the client’s creditors;
- that the client’s account is always credited with 100 percent of the amount paid;
- that the client is responsible for alerting the agency to any discrepancies between its statement to the client and the amount posted on the statement from the creditor; and
- the impact of late or missed deposits to creditor payments and concessions.
The DMP agreement contains:
- the client’s signature, made before the initial disbursement;
- statement regarding the client’s right to cancel the DMP contract within a specified period;
- the estimated timeframe for completing service objectives, barring unforeseen developments;
- estimated finance charges or creditor fees associated with payment plans or extensions that may increase total indebtedness; and
- an estimate of total fees to be paid to the agency over the term of the agreement.
Information listed above may be included in a similar document, such as an amortization schedule or payout schedule.
Regarding bullet d, the agency may indicate that the estimated fees are based on current creditor polices and may change over time.