Debt Management Plans: What You Need to Know

How our program helps:

  • Significantly lower your monthly payment
  • Reduce your debt to a fraction of what you owe
  • Be debt free in as little as 12 to 48 months

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Debt Management Plans

What you need to know ...

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What Are Debt Management Plans?

If you're struggling to pay off debt, a new way of managing your finances may be able to help you get back on track. There are a variety of debt relief options you can use, including enrolling in a debt management plan (DMP) or a debt resolution program. Both can help you regain control of your finances, but which option is best?

Debt management plans, also known as debt management programs, are offered through credit counselors. When you enter a DMP agreement, your counselor will communicate directly with your creditors and attempt to negotiate new payment plans for each of your enrolled debts. Rather than paying your creditors directly, you'll make a monthly lump sum payment to the credit counseling agency, who will send those funds directly to your creditors. The agency may be able to secure lower interest rates on your behalf, but it's unlikely that your principal balances will change. DMPs can vary in length, but most take about three to five years to complete.

Debt resolution programs, like those offered through Accredited Debt Relief, share many similarities with DMPs. When you enroll, Certified Debt Specialists will work directly with your creditors to secure better terms and agreements on your behalf. The key difference is savings: oftentimes, resolution companies can help lower your principal balances, allowing you to overcome your debt for as much as 50% less than what you originally owed. Debt resolution companies can also help you get out of debt faster than DMPs, with many clients being able to complete their programs in as little as 12-48 months.

When debt prevents you from accessing your basic needs, it’s time to get help.

After her husband's accident and periods of time without work, Amy found herself in a serious debt. Accredited Debt Relief helped her overcome more than $52,000 in credit card and medical debt.

Pros and Cons of Debt Management Plans

Depending on your unique financial circumstances, a debt management plan may not be the best option for you. Be sure to research thoroughly before committing to a DMP.

Pros of DMPs

Consolidated Payments: Rather than juggling multiple payments with different due dates and amounts, a DMP allows you to combine your debts into one, simpler payment.

Help From a Professional: The credit counseling agency running your DMP can provide you with additional financial help, including free resources and workshops, budgeting assistance and advice on money management.

Potential to Have Lower Payments and Waived Fees: Credit counselors will negotiate with creditors on your behalf. Although they won’t be able to lower the principal balances on your enrolled accounts, credit counselors will attempt to lower your interest rates, reduce any additional fees and negotiate lower monthly payments.

Cons of DMPs

You’ll Still Have to Pay Back Your Debt in Full: Credit counselors may be able to reduce your interest rates or break your debt into smaller payments, but it’s likely that your principal balances will not change. Debt resolution programs are great alternatives, as they may be able to lower your principal balances by as much as 50%.

Will Show Up On Your Credit Report: Although the fact that you’re participating in a DMP does not directly affect your credit score, creditors will be able to see that you’re making payments through a third party. Some lenders may interpret this as a red flag. You may be asked to close credit cards as part of the DMP, and that action can decrease your available credit and lower your credit score.

Unsecured Debt Only: Debts tied to collateral and some types of unsecured debts, like some student loan debt, are not eligible to be enrolled in a DMP. On the other hand, medical debt relief may be an option.

Limited Access to Credit: Depending on the terms of your DMP, you may be asked to close enrolled credit cards. You may also be required to stop using credit cards that aren’t part of the DMP while you’re in the program.

Debt Management Companies May Help If...

Your Payments are Too High

You're paying too much interest or are stuck making only minimum payments

Your Accounts are Maxed Out or in Collections

One or more of your credit cards are maxed out or your credit utilization is over 40%

You Have Missed Payments

You miss payments or you can’t afford both your monthly payments and basic needs

Your Money Stress is Affecting Your Health

Your debt is worsening your quality of life, physically or mentally

Managing Debt FAQs

Sometimes, DMPs provide participants with expert assistance, often resulting in lower interest rates and fees. However, DMPs offered through credit counselors typically don’t result in savings beyond fees. Debt resolution companies, on the other hand, can often work with your creditors to reduce your overall debt by as much as 50%.

There are many ways to address credit card debt, including debt resolution programs, debt consolidation loans, credit counseling and DMPs. While some debt relief options may be able to reduce your interest rates or secure more favorable repayment terms, debt resolution programs can also reduce the total amount of debt you owe.

It depends — like many debt relief strategies, DMPs may indirectly affect your credit score. You may be asked to close credit cards as part of your DMP agreement, which decreases your available credit and could lower your credit score. Lenders can also see that you’re making payments towards your debt through a third party when you participate in a DMP; this may be seen as a red flag when a lender considers whether or not to offer you a new line of credit.

Is A Debt Management Program Best For Me?

Many with debt could benefit from the help of a DMP, but these plans aren’t for everyone. If you don’t have a steady stream of income that can cover a monthly DMP payment, or if you need access to credit within the next few years, it might be better to choose a different debt relief option.

When searching for debt management solutions, it’s important to do your research and select an accredited organization to work with. Debt relief providers who are part of the American Fair Credit Council (AFCC) or the National Foundation for Credit Counseling (NFCC) adhere to strict standards and regular audits. You should also look for organizations that are in good standing with the Better Business Bureau.

Accredited Debt Relief provides financial services to individuals throughout the U.S. Our Certified Debt Specialists can help you better manage your debt by providing you debt relief options that best fit your needs, allowing you to reduce your debt sooner. Contact us today for more information.

Accredited Debt Relief: The Best Way to Pay Off Debt

Accredited Debt Relief has helped customers across the country consolidate and resolve their debts. With an A+ BBB rating, we offer customized financial solutions that can help you pay off your debt obligations quicker. Our experienced team can help lower your monthly payments and reduce what you owe overall. To learn more and receive a free, no obligation consultation, contact us today.

Proven Results From Real Clients

Carl F.

Enrolled Debt: $43,922

Final Debt: $21,403

Savings: $22,879*

Enrolled: 2/10/2020

Graduated: 8/31/2021

Kelli M.

Enrolled Debt: $21,974

Final Debt: $12,797

Savings: $9,176*

Enrolled: 3/22/2020

Graduated: 10/21/2021

Ashley S.

Enrolled Debt: $24,954

Final Debt: $10,634

Savings: $14,320*

Enrolled: 1/1/2020

Graduated: 10/28/2021

* These examples do not include program fees. This is small sample of debt settlements our negotiation team has achieved for our clients. These settlements were obtained for clients who successfully met all of their program terms and received settlement offers. Results may vary, and there are no guarantees that all creditors will agree to settle. These examples are not representative of results in all cases.

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