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May 1, 2024 · Their debt management program offers an average interest rate of 8.4%, far below the current national average credit card interest rate of more than 27%. InCharge reports that many customers see ...
- Overview
- Pros and Cons of a Debt Management Plan
- How Debt Management Plans Work
- Eligibility for a Debt Management Plan
- Creating and Implementing a Debt Management Plan
- Is a Debt Management Plan Right for You?
- Alternatives to Debt Management Plans
- What Are the Benefits of a Debt Management Plan?
- Will a Debt Management Plan Hurt My Credit?
- What Are the Alternatives to Debt Management Plans?
A debt management plan is a tailored strategy to help you repay outstanding debt and financial obligations without using a new loan. Typically,
work with creditors on your behalf to determine a debt management plan that fits your financial circumstances. Here’s how debt management plans work and how to decide if one is right for you.
Debt management plans are structured repayment plans to help you repay outstanding debt.
In most cases, credit counseling agencies negotiate payment plans on your behalf.
A debt management plan can help reduce your debt and strengthen your finances, but it’s not for everyone. This strategy has both upsides and downsides to keep in mind when determining if it’s right for you.
Potentially lower interest rates or save on fees
Not all debt is included
You’ll receive a tailored plan that takes into account your specific financial situation, ensuring you'll be making payments you can afford. That way, you can get your finances on track.
With a new payment plan, you can pay off your debt sooner than if you were to only make minimum payments or pay when you could. This can help improve your
as well as save you money on the total
Credit counseling agencies review your finances and then help you negotiate and potentially reduce your outstanding debt. You’ll make one monthly payment to the agency, and then they will pay your creditors. Generally, you will have to pay an initial and monthly fee.
With a debt management plan, it can take a few years until all your outstanding debt is paid in full. You usually won’t be able to open new lines of credit or take out new loans, including credit cards, auto loans, and mortgages while under the plan. In some cases, you may have to close your accounts.
Not all debt is eligible for a debt management plan. Often, only
, such as personal loans or credit card debt, is eligible for a debt management plan. Other types of debt, like a mortgage or auto loan that are backed by
are accredited and trustworthy. If a company is promising quick results and requires an upfront payment, look elsewhere. You can often find a nonprofit credit counseling agency through your bank or local consumer protection agency. A good counselor will spend significant time reviewing your personal situation and offer you several options.
Here are the main steps to take to establish a debt management plan with a reputable credit counseling agency:
Consult with a credit counseling agency to see if you’re a good fit for a debt management plan. A credit counselor will review your financial situation to see if you can qualify. Even if a debt management plan isn’t the right fit for you, a credit counselor should help you find other debt relief options and offer you educational resources.
Create a debt management plan
You have a lot of outstanding unsecured debt, like credit card debt.
You’re carrying a lot of debt with high interest or fees.
You are making minimum payments, but your debt is not decreasing due to interest.
You have trouble making minimum payments on your outstanding debt each month.
You have secured debt or other types of debt that wouldn’t qualify for a debt management plan.
You have some credit card debt but can afford the minimum payments every month.
While debt management plans can offer significant help with reducing your debt, they are not necessarily the best solution for everyone. Consider some alternatives as you work on your debt repayment strategy.
If you have many different types of outstanding debt, like credit cards and secured loans, you may want to try
Debt consolidation is when you take out a loan to pay off your outstanding debt and then make payments on your new loan. This may be helpful if you know how much to borrow as a
than what you’re paying right now on your outstanding debt.
If you have credit card debt, you may want to look into 0%
With a balance transfer, you move over funds from one credit card (or more) onto a card that has a promotional 0% APR for a set amount of months, such as 12 or 24 months. With no interest growing on your balance, you can pay off your credit card faster because your full payment will go toward your principal. You’ll also save more in total interest.
Debt management plans can help you implement a strategy to repay a large amount of debt. You’ll receive tailored advice and support for your financial circumstances. Your interest rate may also be reduced or fees may be waived to help lessen the total amount you owe.
A debt management plan can hurt your credit in a few different ways. You might be required to close some credit cards while you’re in a debt management plan. Closing accounts can lessen your total credit history and your total
, which causes your score to drop.
Rather than getting a debt management plan, you can look into alternatives like a debt consolidation loan, a balance transfer credit card, or even bankruptcy. If none of those are viable options for you, look into setting up your own debt repayment plans, using strategies like the
Or, you could take a do-it-yourself approach by negotiating with your creditors directly, instead of using a credit counseling agency.
People also ask
What is a debt management program?
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Are all debts eligible for a debt management plan?
May 2, 2024 · Accredited Debt Relief: Best for fast payoff. Money Management International: Best for low fees. GreenPath: Best for in-person service. CreditAssociates: Best for success-based fees. InCharge Debt ...
- How much does it cost to work with a debt management company?The cost of working with a debt management company will vary depending on the individual company. You can typically expect to pay both an initial s...
- What is the best debt management company?The best debt management company for you will depend on your individual situation. Be sure to compare your options from a few companies to decide w...
- Is paying for a debt management service worth it?Whether or not paying for a debt management service is worth it will depend on your financial circumstances and goals. While there are fees associa...
- What debts can you not pay off with a debt management plan?Only unsecured debt is eligible for a debt management plan. This means you won’t be able to pay off secured debts — such as a mortgage or an auto l...
Feb 9, 2024 · Here’s a comparison of the debt management plans at some major nonprofit credit counseling agencies. ACCC Available in 50 states. Maximum $39 startup fee. Average $25 monthly fee. Cambridge ...
Dec 6, 2023 · 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 ...
Choose Your Debt Amount. 5,000. Call Now: (866) 612-9971. - OR -. Continue Online. Home > Debt Management Programs > Best Debt Management Programs. Credit card debt is quietly – too quietly! – inching its way back into the financial news headlines and if you haven’t noticed, well, take a look at your bill!
Apr 29, 2024 · Show Pros, Cons, and More. Cost: 15-25% of total enrolled debt. Operating since 2009, National Debt Relief claims to have helped more than 400,000 people get out of debt. National works with most ...
