DMP FAQ for Prospective Clients

Frequently Asked Questions

What are the benefits of a Debt Management Plan (DMP)?

Will a Debt Management Plan damage my credit report score?

Repayment of unsecured debt directly or through a Debt Management Plan (DMP) will, usually, result in gradual improvement in a consumer’s credit score. Most, but not all, creditors show delinquent accounts as current after the creditor accepts the DMP and three consecutive payments have been received.

Per Fair Isaac & Company, the company that created the FICO scoring system formula (a system for quantifying a consumer’s credit worthiness), the formula ignores any reference to enrollment in a Debt Management Plan that may be in a consumer’s file.

How credit reports or access to new credit will be affected in the future depends on the view of the prospective creditor. Some creditors will see enrollment in a DMP as negative history, but others will regard it as a sincere and responsible attempt to satisfy one’s financial obligations.

If this is a concern, we recommend that you call each of your specific creditors and ask how they would report to credit bureaus if you were to join a DMP.

What will enrollment in a Debt Management Plan cost me?

There is no enrollment fee for a Debt Management Plan. ClearPoint’s fee is the lessor of $40 per month or the amount permitted by state law.

Developing money management skills is a crucial aspect of all debt management plans (DMPs). We want our DMP clients to be successful during and following their participation in a DMP. To enhance the effectiveness of our counseling sessions, for those clients that are enrolled in DMPs, financial education is incorporated into the plan. We provide every credit counseling client with our proprietary Guide to Financial Achievement which covers the most important personal finance skills such as budgeting, how to pay down debt, getting your financial records in order, and setting financial goals.

How long will a DMP last?

Clients who complete the DMP will repay 100% of what they owe in 3 – 3 1/2 years on average; in some cases the repayment time can take 48-60 months. During your counseling session, your counselor will estimate your payoff time.

Will I be able to get credit again after being on a DMP?

For the majority of clients on a repayment program, the answer is yes, though some creditors using risk-based-pricing may at first attempt to charge a little higher rate. That is why it is important to shop around for the best rate and terms to meet your individual needs. Many of our clients though actually find their credit better at the point of successfully completing their program than when they began, resulting in a higher credit score, and offered better interest rates.

When you enter a ClearPoint Debt Management Program (DMP), ClearPoint does not report your participation to credit bureaus. However, each creditor deals with our clients in a different way. Some creditors may report that your account is included on a DMP — which in and of itself is not considered negative, according to the bureaus. Creditors may report your account as current when they receive our proposal, while some wait until they have received three consecutive payments or more through ClearPoint. Creditors acknowledge that you are honoring your debts, rather than taking the perceived easier route of bankruptcy; and after seeing a consistent payment history through ClearPoint, may look at you as a better credit risk than the typical consumer.

Other creditors will consider your account delinquent (not meeting the original contractual terms) and will continue to report these delinquencies even though you are working with ClearPoint. They will accept the payment and stop calling you, but they may still report negative information to the credit bureaus. It is up to the individual creditor to make changes in the “History of Payment” column on your credit report. ClearPoint cannot remove information from your credit report, but we can assist you in contacting your creditors for a review of your account, or supply a letter to summarize your consistent paying history, which is most critical to your program success and re-establishing credit.