When it comes to a Debt Management Plan (DMP), there’s no universal definition of success. Some people have written that to succeed on a Debt Management Plan, the client must “pay off all debts in a Debt Management Plan.” This is a bad measure of success and excludes most of the good outcomes of credit counseling.
Sure, some percentage of clients will stick with a Debt Management Plan for the full 3 to 5 years and pay off every cent of their debts. These “successful completions” are great and we celebrate every one of them.
But many more clients achieve success in a different way. Part of what we do is educate our clients on how to budget, use credit wisely, and manage their personal finances to avoid difficulty in the future. That’s why many clients get to a point where they are able to leave the Debt Management Plan and manage their debts on their own. They lose some of the concessions that come with being enrolled in a DMP, but they gain the ability to establish new credit and begin working on improving their credit scores as they pay down their balances on their own.
Other clients may see their credit and personal finances improve to the point where they can refinance or get a personal loan to restructure their debts. This kind of loan approval is very rare these days, but if being on a DMP allowed them to make it happen, then that’s a success.
The fact is, every month on a DMP helps. It helps our clients learn to live on a cash basis and be without easy access to credit. It helps them pay down their balances while enjoying the benefits of lower interest rates and smaller minimum payments. It gives them time to change course and learn new money management skills to improve their financial situation.
That’s success. Every month on a Debt Management Plan is a success. It’s great to stick to the plan until the very end, but by no means is it required. DMPs are voluntary, and whenever our clients are ready to take over their own debt repayment and chart their own course to financial freedom, we applaud their success.