Staying at home: How to downsize from dual to single income
In today's economy, many households are cutting back from a dual income to a single income — whether by choice or because of economic realities like layoffs. The success of such transitions depends on several common factors and plans.
Debt Resolution Plan (DRP) - Service Extension for
DMP Unqualified or Disqualified Clients
If you don't qualify for a standard Debt Managment Program (DMP), bankruptcy is NOT your only option.
Traditionally,heavily indebted households have sought assistance in paying their debt obligations
through full-payment Debt Management Programs (DMPs). Prior to the consumer credit bubble of the 2000s, over-extended
consumers were more likely to qualify for DMPs due to stricter lending standards
that limited debt levels, while financial counselors helped to reduce household
expenditures by suggesting leaner budgets. Research has shown that about one-fourth
of consumers enrolled in DMPs typically completed the program. Today, the vast majority
of consumers do not qualify for DMPs while the number successfully completing DMPs
is falling as well.
The Debt Resolution Plan™ (DRP) is a modified Debt Management Plan (DMP)
strictly for consumers whose accounts have been charged-off and cannot qualify for a traditional full balance Debt Management Plan (DMP). The fundamentally sensible 60-month plan is a
programmatic debt modification alternative to debt settlement that aids consumers by
determining what a consumer can realistically afford to repay using a sophisticated empirical “means
test” while assisting the creditors’ collection activities with a transparent assessment
of the consumer’s true financial position. DRP actively promotes rather than restricts
communication between consumers and creditors. Clients who are current on payments are actively counseled not
to extend their account delinquencies to charge-off status.
DRP is designed to encourage consumers to perform in the nonprofit credit counseling
environment as they seek realistic debt relief assistance as an alternative to debt
settlement or bankruptcy. The recognition of the widening disconnect between unrealistic
creditor collection policies and consumer debt repayment capacity is the underlying
principle of the DRP™ program. The consumers’ empirical assessment and certified
ability to pay – as guided by an algorithmic means test that is based upon U.S.
Federal Government bankruptcy and taxation policies - offers a new innovative approach
to consumer debt collection and recovery practices to help close that gap.
“The DRP provides consumers and financial institutions an independent, transparent,
fair and quantifiable way to assess consumers’ ability to repay their debts without
the stress of unrealistic collection demands or the legal expense of filing for
bankruptcy.” ~ UT House Speaker David Clark
“The DRP offers consumers in desperate need of debt relief a fully legal and regulatorily
compliant safe haven from unscrupulous debt negotiators. This program will save
many honest people from becoming victims of debt negotiation scams that promise
to 'get you out of debt for pennies on the dollar' while paying thousands in fees
and then filing for bankruptcy anyway.” ~ Utah Attorney General Mark Shurtleff
Is the DRP similar to traditional Debt Settlement?
No. The DRP plan is administered by an acredited nonprofit consumer credit counseling
agency and NOT a for profit debt settlement company. Therefore, based upon its nonprofit
charter, a credit counseling agency will always work for the best interest of the
client. There are many other reasons the DRP approach is different than Debt Settlement.
The assessment precisely calculates a consumer’s capability to repay unsecured debts based upon innovative algorithmic
software.
What is included in the assessment?
The assessment consists of performing a counseling session
that calculates an individual or household’s ability to repay unsecured debts, such
as credit cards, medical bills, and personal loans. Based upon the results of the
assessment, counselors will recommend the best debt resolution
program for the individual or household. Programs include a traditional full-payment
Debt Management Plan (DMP), a Debt Resolution Program (DRP), or bankruptcy as the
least preferred option.
How long does the assessment take?
The assessment typically takes about 45 minutes to complete, depending upon the
complexity of the client’s household financial position. After completing the assessment,
each client will be informed If s/he qualifies.
How much does the assessment cost?
The assessment fee is $45 for individuals or households. You can cancel
the assessment before completing the counseling session and receive a full refund.
If you do not qualify for the DRP Program and wish to be re-evaluated at a later
date, you may request a second assessment within 60 days without paying an additional
fee.
What are the fees for the DRP Plan?
Service fees vary according to state regulations of existing supervised Debt Management or Budget Planning services.
Reasons why Debt Resolution is not the same as Debt Settlement:
Algorithmic software provides an arithmetic estimate of consumer debt capacity
that identifies the most appropriate debt resolution plan : full, partial, bankruptcy.
The agreed repayment plan offers creditors a net payment that ranges from 20%-99%
over 3 years.
DRP actively promotes rather than restricts communication between consumers and
creditors. Consumers are actively counseled NOT to extend their account delinquencies
to charge-off status.
All creditors are treated equally with pro-rata monthly payments. In contrast, Debt
Settlement programs only execute sequential, single settlement payments (typically
30%-50% of outstanding balance) to creditors after the consumers’ debts have been
“charged-off.” .
Client payments to creditors are NOT escrowed by partial payment service providers.
Rapid creditor approval will typically result in the creditor receiving an accelerated
pay-down until other creditor acceptances are received. In no event will any single
creditor receive more than the distribution amount detailed in the Certified Debt
Resolution Plan.
DRP works through accredited, nonprofit Credit Counseling Agencies (CCA) and therefore
does not generate aggressive mass marketing campaigns with high pressure commissioned sales staff.
Assessments produce precise repayment plans based on financial information that
is verified and affirmed by sworn affidavit of consumers.
Program service fees vary according to state regulations of CCA supervised debt management
services.
The customized DRP Plan may qualify unsecured creditors for “work-outs” rather than
principal “charge-offs” depending upon regulatory charter of bank and estimates
of non-principal reductions of outstanding debts.
If you or someone you know is feeling overwhelmed and struggling financially, please
call our Financial Counseling Center immediately at 1-800-351-4195 for a free confidential
consultation with a Certified Financial Counselor. Counseling is available in-person,
by phone or online.
