Making the decision to get out of credit card debt is a positive step toward a brighter financial future. There are many debt relief solutions to help you achieve your goal of becoming debt free. Among them are debt management plans (DMP) managed by nonprofit credit counseling agencies. But many potential debt management clients wonder how being on a DMP will affect other aspects of their finances, particularly mortgages. Let’s see how a debt management plan affects your mortgage.

The Basics of Debt Management Plans

A debt management plan is an effective way to pay off credit card debt. Offered by nonprofit credit counseling agencies, these plans consolidate multiple credit card payments into a single monthly payment and give clients lower interest rates. This allows faster pay-off time and significant interest savings.

Debt management plans are an excellent solution for people who have a steady income and can afford regular monthly payments, but are having trouble making progress toward paying off debt because of high interest rates.

On a debt management plan, more of each client’s monthly payment goes toward paying off the principal, allowing clients to pay off debt in full more quickly. Many clients are able to wipe out thousands in debt in a little as two years.

Will a debt management plan affect my mortgage?

Debt management plans are designed to help people pay off unsecured debt — that is, debt not secured by collateral. Since a mortgage is considered secured debt, it won’t be included in  the DMP.  Additionally, being on a DMP will not affect the terms and conditions of your current mortgage.

Provided your mortgage is current when you start your DMP, there shouldn’t be any changes in how you pay your mortgage each month while you’re on the plan. In fact, being on a DMP should simplify the bill-paying process since you will only have one DMP payment to make, rather than multiple credit card payments.

Actually, I’m having trouble paying my mortgage.

Being behind on your mortgage won’t stop you from qualifying for a DMP. But of course, you need to address the problem quickly. Many of the credit counseling agencies that offer debt management plans also offer HUD-approved housing counseling.

There are services for those who think they may miss a mortgage payment as well as for people who are already behind on their payments. If you’re worried about missing a mortgage payment or are currently behind on your mortgage, reach out for help now. As will all financial challenges, the sooner you ask for help, the more options you’ll have available.