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Debt Management Plan: Company Reviews and Comparisons

If you’re looking for a responsible way to wipe out your debt, a debt management plan (DMP) may help. This type of plan comes with its pros and cons. That said, it is one of the better debt relief programs. Combining this with a credit counselor can do wonders for you. The key is to have patience, as it can take between 2-5 years for this plan to work.

What is a Debt Management Plan?

A debt management plan is quite simple. It’s a plan created by your credit counselor that helps you pay off debt. A DMP takes all your debts and combines them into one monthly payment. On top of that, your counselor will negotiate better interest rates from creditors. The goal is to be debt free within 2-5 years. Here’s the bad news: many consumers don’t have the patience to wait this long. But if you have patience, and can hold out, this debt relief program works.  It’s worked for thousands of other consumers and it can work for you too.  The key is to be patient and stick to the plan.

Advantages

The advantages of a debt management plan are clear.

  • You work with a financial expert (counselor) to fix your budget
  • Can cut your interest rates in half (yay!)
  • With the help of experts, you can pay debt off much faster than going it alone
  • Consolidates all your payments into one lump sum payment every month

Disadvantages

  • Only works with unsecured debt (i.e, credit cards). This means you can’t use this method for student loans, medical bills, etc
  • Is not a quick solution. It takes time. Usually anywhere from 2-5 years, depending your your financial situation
  • If you miss a payment, creditors can default on your lowered interest rates
    You may not be eligible not open new lines of credit while on the plan

Things to Keep in Mind

  • If you have a high amount of unsecured debt, this may be a good option
  • You should feel confident you can make the monthly payment on time
  • While on the plan, you may not be eligible for new lines of credit (think ahead!)
  • If your total debt is less than 15% of annual income, consider a do-it-yourself approach. You can do this by using the debt snowball or debt avalanche methods
  • If your total debt exceeds 45% of your annual income, bankruptcy may be the best option

Bankruptcy should be the last resort. But there’s not much you can do if you have a fixed income and a large amount of debt that exceeds 45% of annual income.

Reviews and Comparisons

Now that you have a better understanding, it’s time to jump into the reviews and comparisons. The main things we looked at when reviewing debt management companies are:

  • Reliability of the company
  • Customer support
  • Fees
  • Average interest rates
  • BBB rating
  • CFPB (Consumer Financial Protection Bureau) number of complaints
    Review our list below to see if a company matches your financial situation and needs.

Review our list below to see if a company matches your financial situation and needs.