Capital One debt management plan.
Many credit card issuers, including Capital One, are supporting a new debt management plan (DMP). the assistance available from the lender will help their customers get out of credit card debt in as short a period of time as possible.
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 non-profit credit counseling agency, and this agency will distribute the money you pay directly to your various creditors. In other words, Capital One partners with the borrower, the non-profit credit agency, and the borrower as part of the DMP - Debt Management Program. All groups work together to find the best solution.
If you apply for and are accepted into a Capital One debt management plan you may be able to benefit from lower or completely waived finance charges. In some cases your interest rate may be reduced. You will also experience fewer, if any, debt collection calls. In addition to that form of assistance, 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 off during this timeframe 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. In addition there will also be programs offered directly by the lender and their customer serve team. The bottom line is these programs will have a lower repayment rate. The three types of plans that are made available 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. If qualified they 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.
- the customer support team at Capital One can also help the borrower find other, third party DMPs that they can enroll into.
Compare that to most of the other existing DMPs that exist. Most of those 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 exists 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. All of the families income does not need to payinjg off their Capital One Credit Card, so the DMP provides both short as well as long term relief. The exact terms of the debt management plan that you enter into with Capital One will determine the amount of those savings.
Other Capital One assistance programs.
In addition to a DMP, Capital One is offering struggling card holders six months of zero percent interest to catch up on their bills. There may also be some borrowers who can receive APR reductions, fee waivers, debt settlements, and other repayment plans. Various assistance programs will be explored for paying down any credit card debts.
Contact Capital One and ask them about how a debt management plan. Find out how the Call to Action program can help you get out of debt and build savings at the same time. The company can be reached at 1-800-955-7070. Or call the phone number on the back of your credit card.