Debt Management


While many consumers use various debt elimination used interchangeably, we can all agree that getting out of excessive consumer debt leads to greater stability, less stress, and improved chances for long-term financial success.

Debt relief, debt counseling, debt consolidation, debt negotiations, debt elimination and debt management all seem to mean the same thing: get rid of debt. However, they can vary widely in their meaning and method. Often, unscrupulous online actors identify themselves by one term but lead their unsuspecting clients down a completely different, and often financially disastrous, path.

If you are looking for a program that helps you repay 100% of your debts at more favorable terms, then look no further than debt management.


Debt management seems like a simple and harmless term. Obviously, it refers to the act of managing your debt. Who manages your debt and how they do it become the central questions you need to answer before pursuing your options any further.

You can manage your own debt, of course.


Repaying your consumer debts on your own means you pay no fees. However, once interest rates increase on your debts, paying down on your own may become an impossibility because of higher monthly payments.

You can also turn to a friend, a neighbor, a fellow church parishioner, or even a radio talk show host to help you manage your debt. Each can show you and explain your options for getting out of debt. If they do it for free, they might even help you set up your monthly payments, work with your creditors and set up your monthly payments.

What they cannot do, though, is simplify your payments and ensure you are getting the creditors’ lowest interest rates.

For that, you will want to turn to a nonprofit credit counseling agency that belongs to one of the two major credit counseling trade groups, such as the FCAA*. These trade groups promote industry best practices, advocate for better services on behalf of consumers served by their members, and set industry service standards.


Do not respond to telemarketing or email marketing, even if the representative claims to work for a nonprofit. Additionally, check with the Better Business Bureau to ensure the agency you work with has an A+ rating. Check out your state’s attorney general office to make sure there are no former, current or pending lawsuits against the agency that would concern you.

When you are ready to work with a nonprofit credit counseling agency, contact the organization directly via phone, email or their website.

*Money Fit by DRS belongs to the Financial Counseling Association of America.


If you work with a nonprofit credit counseling agency to manage your debt, you can expect that they will do the following:

  • Help you put together a personal or household budget
  • Provide you with clarity regarding your current debt situation (whom you owe, how much, and how long it would take to repay at minimum payments)
  • Compare your current debt repayment options with a debt management program
  • Negotiate new agreements with your creditors on your behalf to lower your interest rates, stop late or over-limit fees, and start reporting your payments as on time rather than late
  • Simplify your life by accepting a single payment during the month from you and dispersing it to all of your creditors per their new agreements with you
  • Offer you multiple free financial education programs, classes, tools and materials to increase your ability going forward to avoid similar financial struggles

Debt Management Frequently Asked Questions

Select the question below to reveal the answer:

What can you include in a debt management plan?

Nonprofit credit counseling agencies that offer debt management plans can negotiate lower interest rates and lower monthly payments and offer a consolidated monthly payment for the following types of debts:

Current or old Credit Card Debt Medical bills Collection accounts Old utility bills Old cell phone bills Payday loans Signature loans Repossession debts

While not possible to negotiate a lower balance or interest rates, the following debts and obligations can also be consolidated into your monthly payment:

Student loan payment Child support payment Back taxes on a repayment plan

What can you not include in a debt management plan?

By regulation, nonprofit credit counseling agencies cannot negotiate lower interest rates and other repayment terms on any secured debts. These include:

Home mortgages Car or Truck loans Home equity lines of credit Most business loans Current tax obligations Pawn loans Car or Truck title loans * Student loans

When should you use a debt management program?

Do not trust agencies promising to help you find a debt management program. Trustworthy agencies offer the program themselves and do not contract with other agencies for referrals. While debt management programs tend to extend help to more consumers than other debt elimination options (debt settlement, debt consolidation loans, and even bankruptcy), they are not a one-size-fits-all solution.

The ideal debt management client is dealing with one or more of the following scenarios:

Has trouble paying their debts on time and on their own Is struggling with high interest rates (e.g. 15% or more on credit cards) Can’t keep track of all of their debt accounts and monthly payments Doesn’t know exactly how much debt they have or to whom they owe money

If you recognize any of these signs of trouble in your own financial life, now is a good time to contact a nonprofit credit counseling agency by phone, online, or via email.

How much debt do you have to have to use a debt management program?

If an agency tells you they have a $10,000 minimum for their debt management plan, they are almost certainly referring to a debt settlement program. Debt settlement companies do not work with consumers with debt under $10,000 because it does not make financial sense for the debt settlement company.

On the other hand, nonprofit credit counseling agencies do not have any minimum debt standards. Whether they recommend a debt management program or not is based on what make the most financial sense for you, the consumer, not for their agency.

How long does a debt management plan stay on your credit report?

It no longer appears to be standard practice for creditors to report your participation in a debt management program to the consumer reporting agencies (a.k.a. credit bureaus). However, if they do, the notation only remains on your credit report until you complete the debt management program. Once you have repaid your debts, the notation comes off and leaves no lasting indication that you were ever on such a program.

It is also important to know that even if a creditor places such a notation on your credit report, it has no effect whatsoever on your credit rating.

Are debt management plans a good idea?

If you struggle to pay your debts on your own (e.g. making payments, negotiating interest rates and repayment plans with your creditors), your next consideration should be to reach out to a nonprofit credit counseling agency that offers a debt management plan. Make sure you contact a credit counseling agency and not a debt settlement company.

Do debt management programs work?

For consumers with stead income who are still struggling to afford their money payments due to high interest rates, debt management programs can absolutely be a helpful tool.

That said, debt management programs are not appropriate for all financial challenges, including periods of unemployment or problems stemming solely from housing or vehicle costs.

Who should consider a debt management program?

If you have steady income and identify with one or more of the following factors, a debt management program may be an ideal solution for you and your household:

You struggle to meet monthly payment(s) at current repayment terms You have credit cards with above average interest rates (e.g. 15% or higher) You are dealing with collection accounts demanding immediate payment in full You have health-related creditors (hospitals, doctor offices, labs, etc.) that are requesting payments beyond what you can afford A creditor is threatening to take you to court if you do not make a payment You have one or more payday loans with approaching final due dates, and you won’t have the full payment in time

Debt management program do not set minimum or maximum amounts of debt required for enrollment.

Do debt management plans hurt your credit?

No. Participation in a debt management plans through nonprofit credit counseling has no direct impact on your credit rating. See FICO’s related statement.

A debt management program may or may not have an indirect impact on your credit rating up front when you close your accounts. That said, the on time payments and debt reduction through your debt management program will generally have a positive impact on your credit rating.

Lots in misinformation about debt management programs (DMPs) exists on the Internet and social media. Unfortunately, even so-called experts who sell their own personal finance programs can be sources of disinformation about how debt management programs work.

You may even find particularly well-known radio hosts will consistently steer their listeners away from debt management programs to their own fee-based programs, lumping DMPs into the same pot as debt settlement services and bankruptcy. Make sure you understand the difference.

For additional information, see a similar question on our page about working with credit counseling agencies.


If you have debt, debt management is your answer. It is up to you to decide if you will manage your debt on your own or with third-party help. Since debt does not go away on its own, your plan to manage your debt needs to start with a commitment to do something about it.

Next comes your research into the best options. Do you stick with minimum monthly payments (and maximum long-term cost), find additional money to send every month, work with a nonprofit credit counseling agency, or take the drastic steps of debt settlement and bankruptcy? You do not have to make these decisions on your own. Our counselors are happy to walk you through your options at no cost to you.