Key takeaways

  • A debt management plan (DMP) makes it easier to manage your secured debts as you’ll likely get a more affordable monthly payment.
  • You can avoid collection calls, save a bundle in interest and get out of debt sooner if the credit counselor successfully negotiates a DMP with your creditors.
  • DMPs are only limited to secured debts.

If you’re sending money to creditors every month, but it doesn’t seem to make a dent in your debt, a debt management plan may help.

Under a debt management plan, a credit counselor will help you set up a realistic plan, negotiate better terms with your creditors and roll your unsecured debts into one monthly payment. The goal is to help you get out of debt in three to five years and get back on track financially without destroying your credit health.

What are debt management plans?

A debt management plan (DMP) is a payment schedule that allows you to consolidate debts into one affordable monthly payment and pay down your debt over time, usually over three to five years. But instead of paying creditors directly, the credit counseling agency will collect and allocate funds per the agreed-upon payment schedule.

How do debt management plans work?

First, you’ll meet with a counselor online, in person or over the phone, who reviews your credit reports and bills. They help you create a budget and discuss your payment options. If you agree a DMP is the best choice for you, the counselor will contact your lenders and try to negotiate your loan terms. For example, your credit card issuers may agree to lower your interest rates, monthly payments, waive fees or reduce the amount you owe.

Each month, you’ll make a single payment to the credit counseling agency, which distributes the money to all of your creditors. The agency may also charge you a setup fee and a small monthly fee for the service. The fee amount depends on state regulations, but you may be eligible for a fee waiver if you meet certain income qualifications. Your overall monthly payment should cost less than what you paid before entering the plan.

Pros and cons of debt management plans

Before moving forward with a debt management plan, review your options and consider the pros and cons.


  • You’ll have a single payment each month that’s likely lower than what you’re paying on your combined debts now.
  • You’ll save money if the counselor successfully negotiates lower interest rates and fees.
  • Phone calls and letters from collection agencies will stop while you make payments.
  • You’ll know exactly when you’ll pay off your debt.
  • A debt management plan has much less impact on your credit than a bankruptcy or debt settlement if you pay off the original balance.


  • A debt management plan won’t fix an underlying problem with overspending.
  • Generally, these plans are only available for debt not secured by collateral, such as a house or car.
  • If the credit counselor asks you to close your credit cards before entering the debt management plan, your financial resources and access to credit will be limited. Closing your credit cards will also likely hurt your credit.
  • Your creditor may add a note to your credit reports that says you’re in a debt management plan. Although this shouldn’t hurt your credit scores, it will signal to lenders that you shouldn’t take out new credit.
  • Some of your creditors may not agree to a negotiated plan.
Key takeaway
A debt management plan could be an ideal option if you seek professional assistance with managing your debt load. You could get out of debt much faster than you would on your own without tanking your credit rating, but you’ll likely have to stop using credit while enrolled in the plan.

Who a debt management plan is best for

Debt management plans are usually best for people who are deeply in debt but can still make the required monthly payment. You’ll also have to check whether your debt qualifies for the plan.

There are alternatives to a DMP, such as bankruptcy or a debt consolidation loan. A qualified credit counselor can help you figure out if a debt management plan is right for you. To find one, look to the National Foundation for Credit Counseling or the U.S. Department of Justice; both maintain lists of reputable credit counselors.

Types of debt management plans

DMPs can fall under two broad categories: for-profit and nonprofit.


As the name implies, a for-profit DMP is run by an agency with an eye on the bottom line. While they offer the same services as non-profit credit counseling agencies that offer debt management plans, their services might come with steep fees.

“For-profit agencies might have excellent counselors, but they probably offer many other services that they might push on their clients – whether they’re beneficial or not,” says April Lewis Parks, director of education and corporate communications at Consolidated Credit. “It’s akin to an investment firm nudging you toward funds that give them high commission while giving you low returns.”

You also want to beware of for-profit DMP agencies that offer a quick fix. The average time it takes to repay your debt under a DMP is three to five years. If an agency is offering too-good-to-be-true expectations, they probably are.


As the FTC mentions, most reputable DMPs are from non-profit agencies. Depending on your financial situation, many non-profit credit counseling agencies might offer their services for free or at a low cost. They also offer educational tools, and additional services or resources to help you rebuild your credit and budget better.

The FTC says to beware of the fact that a nonprofit agency doesn’t mean services are free, low-cost, or legitimate. Some non-profit organizations might hide high fees, or ask you to make “voluntary” contributions that actually result in you adding to your debt load.

Whether you choose a for-profit or nonprofit agency for a DMP, read reviews and complaints from trusted, reputable sites such as Consumer Affairs, BBB and TrustPilot.

Best debt management companies

As you research companies that offer debt management plans, ask about the monthly fee, the setup fee, how long it may take to complete the plan and which types of debt you can include. Then ask the company about its track record. How many people complete the plan, and how much do they save over time?

The best debt management companies, according to overall customer reviews, are the following.

American Consumer Credit Counseling, Inc. (ACCC)

Established in 1991, ACCC is a non-profit debt management company that also operates in all 50 states. Its debt management program is designed to be completed in 36 to 60 months and lower your monthly payments and interest rates by 30 to 50 percent. Clients also receive ongoing support, including debt management education and counseling, throughout the process. The enrollment fee is $39, and you’ll pay a monthly maintenance fee of $7 per account (capped at $70).

  • Who this is best for: If you want a credit counseling company that serves all 50 states, offers in-person assistance in 12 states and Washington, D.C. and features many finance-related educational resources on the client dashboard.

Cambridge Credit Counseling

This nonprofit credit counseling agency says clients usually complete the debt management program within 48 months on average and save around $140 per month. Cambridge counselors say they are typically able to negotiate interest rates from about 22 percent down to 8 percent on average. Startup and monthly fees vary by state.

  • Who this is best for: If you prefer to receive your counseling over the phone or via video conference.

GreenPath Financial Wellness

Members typically repay their unsecured debts within three to five years. The average enrollment and monthly fees are $35 and $28, respectively, depending on your state and your debt.

  • Who this is best for: If you’d like to manage your account and track your repayment progress online. If you prefer in-person counseling and live in one of the 13 states where GreenPath has a physical office.

InCharge Debt Solutions

This company says the average person completes a DMP within three to five years and pays an interest rate of around 8 percent. The setup fee is $75, and the average monthly fee is $33, depending on your outstanding balance and state or residence.

  • Who this is best for: If you’d like to manage your debt repayment plan through an app. You can also talk to a human at InCharge six days a week.

Money Management International (MMI)

MMI is a nonprofit credit counseling agency that’s available in all 50 states and offers help online, over the phone and, in some states, in person. Members usually complete a DMP within three to five years. The average set-up and monthly fees are $33 and $25, respectively.

  • Who this is best for: If you’d like around-the-clock debt counseling or prefer in-person counseling, which is available in 25 states.

Next steps

A DMP can be a solid choice if you’d like to work with an intermediary that can help you develop a repayment plan and potentially lower your interest rate and monthly debt payments.

When researching organizations to work with, check to see how long they’ve been around, recommends Park-Lewis. “I’m talking decades, not years,” she says. “The older they are, the more people they’ve helped. That means they’ve seen it all before. Whatever problems you face, they’ve solved them many times over.”

You’ll also want to look at their ratings on trusted review sites and what past clients say about working with that particular agency. “Not everyone will be happy because humans are messy creatures and miscommunications happen,” says Park-Lewis. “But did those credit counseling agencies respond to complaints and try to make them right? Did they explain what happened?”

By doing your due diligence, you’ll have a better chance of finding a debt management plan that meets your needs, goals and budget.