Debt Management Plans

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What Is a Debt Management Plan?

A Debt Management Plan (DMP) is not a loan. It’s a tool to get you back on the road to a financially stable, debt-free future. A dedicated NFCC-certified, nonprofit credit counselor can also help you determine if entering into a Debt Management Plan is the best option for you, and if not, lay out all your available options.

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When you work with an NFCC agency on a debt management program, you may benefit from reduced or waived finance charges or fees, fewer collection calls, and your accounts will be credited with 100 percent of the amount you send in. When you have completed your payments, the fact that you did repay your debt in full and according to plan, may help you re-establish credit.

How Does it Work?

First, you and an NFCC certified credit counselor will review your finances, then determine if a Debt Management Plan is right for you. People who sign up for a Debt Management Plan make one lump payment each month to the nonprofit credit counseling agency who then sends those funds directly to creditors. Having a set lower monthly payment can take the pressure off of your budget so you can manage other financial obligations.

Sometimes all it takes is having someone walk through your situation with you and show you where to cut costs, help create a budget and bring hope with a plan for a better financial future.

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Debt Management Plans vs. Debt Settlement

It’s important to know that these relief options are not the same. As a simple overview, debt management is carried out by nonprofit counseling agencies that help you lower your interest rates and monthly payments without affecting your credit score. Debt settlement can be a risky option that involves paying a for-profit company to negotiate on your behalf, but can affect your credit score while waiting for the company to negotiate a lower payment.