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Comparing Debt Management Plans

Budgeting, Paying Off Debt, Personal Finance
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Comparing Debt Management Plans

A debt management plan from a credit counseling agency can help you pay off consumer debt in a way that saves time and money. A DMP gathers several debts into one monthly payment and gets creditors to reduce your interest rate. In exchange, you agree to a payment plan that usually runs three to five years.

Here’s a comparison of the debt management plans at some major nonprofit credit counseling agencies.

Agency / availabilityAverage interest rate cut
Average feesLearn more

Available in 47 states

  • 11%, down from 22%

  • $42 startup fee
  • $30 monthly fee

Available in all 50 states
  • 10%, down from 21%
  • Max $50 startup fee*
  • $36 monthly fee
Money Management International

Available in all 50 states
  • 9.89%, down from 22%
  • $34 startup fee
  • $24 monthly fee

*Average startup fee not available.

Pros and cons of debt management plans


  • Can cut your interest rate by half or more
  • Helps pay off debt faster than doing it yourself
  • Consolidates several debts into one payment


  • Is mostly for credit card debt; can’t be used for student loans, medical debt or tax obligations
  • Takes three to five years, and you’re generally unable to use credit cards or get new lines of credit while on the plan
  • Missing a payment can derail the plan and end your interest rate cuts

Is a debt management plan right for you?

DMPs aren’t for everyone. Depending on the agency, only 10% to 20% of clients end up using this debt relief option. Of those who do, about 50% to 70% complete the plan, depending on the year and how the agency reports completions.

You might consider a DMP if:

  • Your consumer debt is between 15% and 49% of your annual income
  • You have a steady income and think you could pay off your debt within five years if you had a lower interest rate
  • You can get by without opening new lines of credit while on the plan

Alternatives to a debt management plan

DMPs are not always the best route for debt relief. Problem debt from student loans and medical bills will generally not be covered under such plans. Other options:

  • If your problem debt is less than 15% of your annual income, you could take a DIY approach using the debt avalanche or debt snowball method.
  • A debt consolidation loan, if you have good enough credit to qualify, can also gather debts into one at a lower interest rate. You have control over how long the loan is and retain your ability to open new credit lines.
  • Bankruptcy may be better if your debt is more than 50% of your annual income and you see no way to pay it off within five years. This debt relief tool can quickly give you a fresh start, and consumers’ credit scores can start to rebound in as little as six months.

What you need to get started

If you think a DMP might be your best option for debt relief, start by choosing a credit counseling agency. Consider:

Certification and accreditation: Look for an agency that’s a member of the National Foundation for Credit Counseling or the Financial Counseling Association of America. They require agencies to be accredited by an independent organization, and both require certification and a standard level of quality among counselors.

Access: Ask yourself how you’d prefer receive services: over the phone, in person or online.

Cost: Fees vary by agency, the state you live in and your financial need. Before you sign up, verify how much you’ll pay each month toward your debt and in fees.

Once you’ve found an agency you’d like to work with, you’ll start with a budgeting and intake session. Prepare by gathering information detailing your financial life:

  • Your monthly expenses, including everything from house payments to haircuts
  • Your monthly income
  • All of your debts

You and the counselor will discuss your finances and goals to see whether a DMP is right. Agencies also offer information on budgeting, handling student loan debt, bankruptcy and more.

Sean Pyles is a staff writer at NerdWallet, a personal finance website. Email: Twitter: @SeanLoranPyles.