Bank of America debt management plan (DMP).

Bank of America has joined with other credit card companies to support a new hardship debt management plan. They have partnered with the National Foundation for Credit Counseling (NFCC) in this capacity.

The new plan, which is part of a program known as “Call to Action”, creates a second level of debt management plans (DMP) for customers who are in particular distress due to a financial emergency or some other unexpected situation. It allows those customers a lower repayment rate. This year BOA has said they expect to provide credit card relief, DMPs, and hardship programs to almost 1.2 million credit card holders.

Per the NFCC, for over 40 years millions of consumers have avoided defaulting on their debts, prevented a bankruptcy and benefited from repayment programs known as debt management plans. These plans have  creditors provided customers with some repayment concessions. Some of the assistance provided can include waiving late and over-the-limit fees, miscellaneous charges, and also many will provide a reduction in interest rates on the credit card. What is the current challenge though is that these difficult economic times, fewer and fewer consumers have high enough household income to be eligible for, or they do not have the ability to maintain a traditional DMP. So the new hardship debt management plan from Bank of America and others can be a great option for them. Also, read more on other Bank of America programs, including debt settlement, hardship, and consolidation.

How does the Bank of America DMP work?

• It is targeted towards hardship cardholders. Thus are defined as those customers who are dealing with a recent job loss or who may be facing other especially challenging circumstance. These people would owe a minimum 1.75 percent repayment rate on their outstanding debts.
   
• Other consumers who do not fit into the hardship criteria would have a monthly minimum repayment rate of 2 percent of their credit card balance. Under current, existing debt management plans, that repayment rate can reach as high as 3 percent. So this is a significant decrease.

So, if you provide a real life example, what this means is that a consumer classified as a hardship customer  with $40,000 in unpaid debt would now have a minimum payment of about $700. Today, that same customer may have a payment of as high as $1200. If the customer is not a hardship customer, their minimum payment would be $800.

Not only will the new debt management plans that are supported by Bank of America help borrowers get out of debt, they will also encourage them to set aside funds for a financial safety net, so the next emergency that arises the family has the cash to deal with out.

Contact Bank of America at (800) 500-5306 and ask them about your options for a debt management plan.