How does a debt management plan work?
Posted 6/12/2024 by Lisa Ohnemus

A Debt Management Plan (DMP) is a structured repayment program designed to help individuals manage and repay their unsecured debts. A DMP involves consolidating multiple debts into a single, manageable monthly payment.

Here's a detailed look at how a Debt Management Plan works:

1. Assessment and Enrollment

  • Financial Assessment: A credit counselor will review your financial situation, including your income, expenses, and the total debt you owe.
  • Creating a Budget: With your counselor, you will create a realistic budget to cover your essential living expenses while making monthly debt payments.
  • Debt Evaluation: Our counseling sessions aim to help you find the best solutions to your financial problems. In many cases, our professional advice may be all you need to handle your situation and take control of your debt or spending habits. For some who may be considering bankruptcy, our impartial advice may help them re-affirm that decision. Finally, our debt management programs are a great way for many to pay off their debt, according to their means, in a reasonable time frame.

2. Consolidation of Payments and Negotiation with Creditors

  • Single Monthly Payment: Instead of paying multiple creditors monthly, you make one consolidated payment to Consumer Credit.  Monthly Consumer Credit will distribute the funds to your creditors according to the agreed-upon terms.
  • Interest Rate Reductions and Stopping Fees: Using a Debt Management Program, we can help you save money by lowering your interest rates, stopping fees, and reducing your monthly payments.

3. Repayment Period

  • Fixed Term: DMPs typically last 3 to 5 years, depending on the total amount of debt and the negotiated terms.
  • Regular Monitoring: The credit counseling agency monitors your progress and provides ongoing support and advice.

4. Completion and Aftercare

  • Debt Paid Off: Once the DMP is complete, your unsecured debts should be paid off.
  • Credit Impact: Successfully completing a DMP can improve your credit score as you demonstrate consistent, on-time payments.
  • Financial Education: We offer financial education and resources to help you avoid falling back into debt.

Advantages of a Debt Management Plan

  • Lower Monthly Payments: You may be able to reduce your monthly payments by consolidating payments and negotiating lower interest rates.
  • Simplified Payments: Managing a single payment each month can make budgeting easier.
  • Reduced Stress: Knowing you have a plan to pay off your debts can relieve financial stress.
  • Avoiding Bankruptcy: A DMP can be an alternative to filing for bankruptcy, which can have more severe long-term effects on your credit.


  • Unsecured Debts: DMPs typically cover unsecured debts such as credit card debt, personal loans, and medical bills. They do not cover secured debts like mortgages or car loans.

A Debt Management Plan can be useful for getting out of debt and achieving financial stability. Contact our office at 800-955-5765 to get a customized savings and payoff plan for your creditors or schedule an appointment on our website at

We welcome any additional questions and are excited to assist you in your journey to improve your financial future!