Can Secured Debt Be Placed In A Debt Management Program?

Debt Management Program Defined

First it is important that the consumer understand exactly what constitutes a debt management program, and how it operates to lower debt.  A debt management program, or DMP, is typically offered by financial institutions, attorneys, or more typically by credit counselors.  Each has their own system and will look out most often for their own interests.  In the case of a credit counselor, these organizations are not businesses but non-profits established to help consumers with credit and debt problems.  They are usually the most trustworthy source to establish a debt management program.

In a typical debt management program, the consumer will be asked to present all their bills and lines of credit, including secured debt in order to be evaluated.  The debts will then be evaluated to determine whether they can be included in the debt management program.  Most banks and credit issuers have what is referred to as a “hardship clause”.  This is a reduced payment, based on a percentage of the debt owed, that is offered to struggling consumers.  Not all loans offer this feature.  In any case, the debts you owe will be organized and a budget made between you and the debt management program company.  The budget will establish a monthly amount you must meet to cover all the requirements of the bills you currently owe.  The DMP will establish a new and separate account where you deposit your new combined monthly payment.  The DMP company will then use this money you deposit to pay down your creditors each month.

The Secured Debt Problem

In all cases, any and all secured debts should be attempted to be included in a debt management program.  Whether or not they will be accepted by the loan issuer depends on two factors: the actual value of the secured asset and the amount owed to the creditor.  If the security interest, the amount that is recoverable from the asset secured in the loan, is too low to be useful to seize and sell, then the creditor may let you negotiate it.  In all cases, the issuer of the secured loan makes the call, not the consumer or credit counselor.

Related posts:

1. How To Find A Debt Management Program?
2. What Is A Debt Management Program?
3. What Is The Difference Between Secured And Unsecured Debt?
4. How Do You Secure Non Secured Debt?
5. How Does Debt Management Work?