Capital One debt management plan.

Many credit card issuers, including Capital One, are supporting a new debt management plan (DMP) that will help their customers get out of credit card debt.

What is a debt management plan?

A DMP is an assistance program that provides struggling consumers with a systematic way to reduce their outstanding debt. The borrower will partner with a credit counseling agency, and this agency will distribute the money you pay directly to your various creditors. If you apply for and are accepted to a Capital One debt management plan you may be able to benefit from lower or completely waived finance charges. You will also experience fewer, if any, debt collection calls. After you complete the program the credit counseling agency or other organization you work with will also help you reestablish and improve your credit scores.

How long does it take?

While the exact type of debt management program offered by Capital One will vary, on average it takes 36-60 months to repay debts when using a DMP. The accounts you have with all creditors will be paid with 100 percent of the amount you pay through a credit counseling agency.

What are the types of Capital One debt Management plans?

The Call to Action plan, which was facilitated by National Foundation for Credit Counseling, creates two types of debt management plans for individuals who are struggling. The bottom line is these programs will have a lower repayment rate. There two types include:

• A program for hardship cardholders, which includes people who are dealing with a recent job loss, medical or financial emergencies, or some other especially challenging circumstance, would owe a minimum 1.75 percent repayment rate to Capital One on their credit card bills.
   
• If you do not qualify for the plan above, you would have a monthly minimum repayment rate of 2 percent of your outstanding credit card balance.

Compare that to most of the existing DMPs that exist. Most of these now have a repayment rate of as much as 3 percent. So the difference between the two is significant. A hardship consumer with $20,000 in credit card debt would face a minimum payment of just $350 instead of one as high as $600 that exist in current plans.

 

 

 

Are there other benefits?

The Call to Action plan also allows borrowers to save money for the future. The plans allow individuals to be able to save anywhere from $25 to $200 a month to help them build an emergency cash fund that they can use in case of a financial surprise or future emergency.

Other Capital One assistance programs.

In addition to a DMP, Capital One is offering struggling card holders six months of zero interest to catch up on their bills, APR reductions, fee waivers, debt settlements, and other repayment plans.

Contact Capital One and ask them about how a debt management plan and the Call to Action program can help you get out of debt.