How to Get a Debt Management Plan

If your budget is stretched thin and you have to decide whether to pay one bill or another, it might be time to seek help. Here’s the deal—if you struggle to juggle debt and other financial obligations, you’re not alone. In fact, according to a recent study, one third of Americans are late on at least one bill. Not all of the payments are late due to debt, but regardless of the reasons or circumstances, debt can take a toll on your lifestyle and health.

If you’re ready to change your financial life, a debt management plan (DMP) might be a great solution.

Here’s how to get a debt management plan.

Meet with a credit counselor

The first step is to meet with a nonprofit credit counselor. This is an important step because the counselor will help you determine if a debt management plan is right for you, and that process begins with a financial review.

You’ll start by talking with the counselor about your debt, income, and any other numbers or concerns that are relevant to your financial life. It might seem scary to share all of these details, but it’s important to be honest so your counselor can create a plan that will work for you and your lifestyle.

Read more: What is a Debt Management Plan?

If it seems like a debt management plan will be a good fit and you’re ready to do the work, then your counselor will create a plan. Even if a DMP isn’t the right solution for you, your credit counselor will help you find an solution.

Don’t forget: it’s always free to connect with a counselor.

Read more: What Does a Credit Counselor Do?

Get honest

Debt management plans require hard work and dedication. Your debt will not disappear overnight. In fact, DMPs usually take between three and five years to complete.

In order to be successful with a debt management, you need to commit to the process and focus on your ultimate goal. If you don’t feel ready to commit, then it’s important to be honest with yourself and your credit counselor.

If you are ready to commit, then it’s time to work with your credit counselor to create a plan.

Call your creditors

Once the plan is created and your lenders have agreed to the creditor concessions—these might include lower interest rates, waived late or overlimit fees, and reasonable monthly payments—you’ll want to call your creditors to change your payment due dates.

When you’re on a debt management plan, you no longer pay each creditor directly. Instead, you pay your credit counseling agency one monthly payment and they pay your creditors on your behalf.

Even though your credit counseling agency has already communicated with your creditors and established a DMP, it’s still important that you speak with your creditors and make sure that the due dates on your individual accounts line up with your new DMP payment date. The goal is to have your credit card payment due 7-10 days after your credit counseling agency payment is due.

This will ensure that there is enough time for you to make your payment to the agency and for the agency to process your payment and then pay the creditors on your behalf.

Follow Through

Once your debt management plan is in full swing, it’s important to follow the rules. Luckily, two of the most important rules are fairly straightforward:

  1. Make your payments on time
  2. Don’t miss a payment

If you don’t adhere to the terms of your DMP, then your creditors take away some or all of the benefits they provide for using repaying through a DMP. This might cause your interest rates or monthly payments to increase. The best way to avoid any problems is to follow the rules and uphold your end of the agreement.

Things happen, though. If you find yourself in a financial bind one month, be sure to reach out to your credit counseling agency as soon as possible, so they can help you find the best solution. Remember that nonprofit credit counseling agencies like MMI are here to help you get all the way to the finish line with your financial goals. No matter how things are going, it’s a good idea to keep those lines of communication open.

Bottom line

If you are ready to get started with a debt management plan, the first step is simple: contact a credit counselor and discuss your options. Money Management International has trained counselors available 24/7.

  • The Consumer Federation of America (CFA) is an association of nonprofit consumer organizations that was established in 1968 to advance the consumer interest through research, advocacy, and education. Today, nearly 300 of these groups participate in the federation and govern it through their representatives on the organization's Board of Directors.
  • The National Council of Higher Education Resources (NCHER) is the nation’s oldest and largest higher education finance trade association. NCHER’s membership includes state, nonprofit, and for-profit higher education service organizations, including lenders, servicers, guaranty agencies, collection agencies, financial literacy providers, and schools, interested and involved in increasing college access and success. It assists its members in shaping policies governing federal and private student loan and state grant programs on behalf of students, parents, borrowers, and families.

  • Since 2007, the Homeownership Preservation Foundation (HPF) has served as a trusted, neutral source of information for more than eight million homeowners. They are partnered with, and endorsed by, numerous major government agencies, including the U.S. Department of Housing and Urban Development and the Department of the Treasury.

  • The mission of the U.S. Department of Housing and Urban Development (HUD) is to create strong, sustainable, inclusive communities and quality affordable homes for all. HUD works to strengthen the housing market in order to bolster the economy and protect consumers; meet the need for quality affordable rental homes; utilize housing as a platform for improving quality of life; and build inclusive and sustainable communities free from discrimination.

  • The Council on Accreditation (COA) is an international, independent, nonprofit, human service accrediting organization. Their mission is to partner with human service organizations worldwide to improve service delivery outcomes by developing, applying, and promoting accreditation standards.

  • The National Foundation for Credit Counseling® (NFCC®), founded in 1951, is the nation’s largest and longest-serving nonprofit financial counseling organization. The NFCC’s mission is to promote the national agenda for financially responsible behavior, and build capacity for its members to deliver the highest-quality financial education and counseling services.