Go to Top

Debt Management Plans & Programs

A debt management plan sets up a payment schedule for you to repay your debts, with the goal of helping creditors receive the money owed to them and ultimately improving your financial and credit standing. By voluntary agreement, you deposit funds with your credit counseling agency each month, who sends those funds directly to your creditors. It usually takes 3-5 years to complete payments under a debt management program, after which you may be able to reestablish credit.

For those with considerable debt problems, a financial counseling session is an effective first step toward learning to manage your finances better. If appropriate, entering into a Debt Management Plan (DMP) administered by a nonprofit NFCC member agency can also start you on the road to a financially stable, debt-free life.


Click here to schedule an appointment with an NFCC certified credit counselor


How It Works

Debt management programs serve the dual role of helping you repay your debts while creditors receive the money owed to them. These debt management plans are a systematic way to pay down your outstanding debt through monthly payments to your credit counseling agency. Your creditor accounts will always be credited with 100 percent of the amount you pay through an NFCC agency. By participating in this type of debt management program, you may benefit from reduced or waived finance charges or fees, and experience fewer collection calls. When you have completed your payments-which typically takes 36-60 months- it may help you reestablish credit.


Debt Management Plans and Your Credit

Participation in a debt management plan will not have any  negative effect on your credit score . While your credit report will have a notation that you’re enrolled in a debt management plan, it is not something FICO takes into account when determining a credit score.

In fact, certain aspects of a debt management plan will have a positive impact on your credit score. These aspects are the amounts owed, payment history, and inquiries for new credit.  Your payment history, which makes up 35% of the FICO credit score, will have a positive impact assuming your payments are made every month. In terms of amounts owed, which makes up  30% of the Fico score, this aspect will be positively impacted as the accounts are paid down.

As far as inquiries for new credit, which is 10% of the score, opening a lot of new accounts in a short period of time has a negative effect on your score. You won’t be able to do this under a debt management plan.

In the end, participating in a debt management plan will be a positive factor in terms of your credit.