Bank of America debt management plans (DMP).
Struggling Bank of America customers can get help from a Debt Management Plan (DMP). In general, the programs are free to people to enter into. While not all of these options, like a DMP, are widely advertised, they exist as part of Bank of America’s broader commitment to financial wellness and responsible lending. Find details below on BofA debt management plans below.
Do you want to read real life examples of this or other BofA programs? The fact is that Bank of America does offers programs to help struggling customers and find examples in our discussion thread of Bank of America credit card assistance programs, where people share their stores and offer tips too.
What is a Bank of America Debt Management Plan?
A debt management plan is a structured repayment program typically arranged through a nonprofit credit counseling agency. The National Foundation for Credit Counseling (NFCC) is a major partner as well as GreenPath Financial Wellness. With Bank of America and the credit counselors they partner with, these plans are used to help customers reduce interest rates and consolidate multiple credit card payments into one manageable monthly amount. The company also has a portal that people can read about credit counseling services noted here. https://www.bankofamerica.com/banking-information/assistance/credit-cards/credit-counseling/.
While Bank of America does not directly manage every DMP, they actively partner with reputable counseling agencies to support clients who qualify. These programs offer different terms and conditions, but they often span 3 to 5 years, during which time your credit cards may be closed to prevent further borrowing. A focus is on customers who are in particular distress due to a financial emergency or some other unexpected situation. This can even include an unexpected job loss or reduction in household income.
These plans have creditors providing eligible customers with some type of repayment concessions as part of how B of A offers credit card hardship to help people. 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.
How does the Bank of America DMP work?
Bank of America works with many nonprofit credit counseling agencies, such as the National Foundation for Credit Counseling (NFCC) or Money Management International (MMI), to facilitate structured payment plans. It is targeted towards cardholders faced with a hardship. This are defined as those customers who are dealing with a recent job loss or who may be facing other especially challenging circumstances.
- Interest rate reductions and fee waivers are commonly offered. Some Bank of America cardholders report receiving rates as low as 6% or less (compared to the typical 15%-25% APR on their credit cards). In some cases, past fees may be waived or your account can be brought current.
- Simplified payment process - Monthly consolidation: You make a single monthly payment to the non-profit credit counseling agency that BofA partners with, so all terms and conditions are legit. That agency then distributes the funds to Bank of America to pay down any debts due..
- Improved credit over time: While there may be a short-term hit to your score when accounts close, your score often improves over time with consistent on-time payments
So, if you need to be provided a real life example, what this means is that a consumer classified as a hardship customer with $40,000 in unpaid debt would have a minimum payment of about $1000, however most of that monthly payment is for interest (it may take 30 years to pay the debt off). If the interest rate on the BofA card was lowered to 6% or so, the monthly payment will be about the same but the majority goes towards principal, meaning the debt may be paid off in 6 to 7 years.
To enter into a debt management plan with Bank of America, you must work through a certified credit counseling agency, either a national or local organization with a list of credit counselors located here. You cannot enroll directly with the bank however the customer service team can also provide referrals The general steps are as follows:
- Initial consultation: Contact a certified credit counseling agency, as noted above This first session is often free (based on your household income and debt levels), the organization will assess your income, total debts (including not just credit cards or loans), and expenses.
- Budget and recommendation: If the counselor determines a DMP is appropriate, they will create a repayment proposal including monthly payment terms and a list of creditors - including B of A.
- Proposal sent to Bank of America by the counselor: The agency submits the DMP to Bank of America for approval. The bank reviews your situation and decides whether to accept the plan, including any interest rate reductions or fee waivers.
The customer service team, working with the credit counseling organization, will review the proposal. Once accepted, you begin making a single monthly payment to the counseling agency. They take that money and pay down any debt owed to the bank as well as other creditors. You must stay current each month or risk being removed from the plan.
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. This is one of the key requirements of the process. So the next emergency that arises the family has the cash to deal with it.
Application information on contact info
To explore a Debt Management Plan or other options, contact the Bank of America Customer Assistance Center directly at 1-800-215-6195 or 800) 500-5306. Be honest about your personal and financial situation - whether it's a job loss, medical crisis, divorce or something else. These programs are designed for customers who are willing to repay but need some breathing room.
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