Chances are, you’ve heard of debt management. But, you might not know exactly what it is or how it works. Luckily, you’ve come to the right article.
Debt management is sometimes called debt counseling and it is often offered through a credit counseling agency. The key to debt management is consolidation: instead of paying several credit card bills a cycle, debt management allows you to send in just one monthly payment.
A debt management plan is not a loan; it’s simply a way of paying off debt in an easy manner. It is a plan that saves you time, saves you interest fees, and saves you stress. It also provides you with the means to pay off your debt within three to five years, usually less.

What is Involved in a Debt Management Plan?
On a debt management plan, professional, certified, and experienced counselors will assess your financial situation and negotiate with your creditors for lower interest rates and elimination of late or over-the-limit charges. The goal of a debt management plan is to provide you with payments that are affordable, allowing you to pay off your debt in a shorter amount of time.
A debt management plan doesn’t just pay off your debt: it also educates you on how to live financially healthy. By helping you understand money management, this plan aids you in forming a budget that you can actually stick to.
Your part of a debt management program involves two simple things: you must not take on any more debt and you must make your monthly payments. Getting in further debt, or omitting payments, defeats the purpose of a debt management plan altogether.

What is the Difference between a Debt Management Plan and Credit Counseling?
Debt management is a part of credit counseling. In a nutshell, debt management reduces your debt by actually getting your creditors to reduce your interest charges and late fees. This service is usually offered through a credit counseling agency.
But, credit counseling involves more than just debt management. Credit counseling aims to teach participants about budgeting finances and managing money. For this reason, it’s recommended that you go to an agency that offers an array of financial education, and a variety of debt and budget counseling, instead of one that only offers debt management.

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How can Debt Management help me?
Debt management has the ability to help you in the following ways:

• You no longer have to worry about the due dates of your many bills: debt management allows you to pay one monthly payment.

• Debt management negotiates with your creditors for lower interest rates and dismissal of fees. This means one thing: you save money and you pay lower monthly payments than you would otherwise

• Debt management takes away perhaps the most annoying thing about debt: the calls from collectors. Your creditors will be getting paid each month and, thus, they will have to find someone else to bother.

• Debt management plans involve debt counseling sessions. These sessions are intended to help you budget, understand management money, and avoid getting into any future debt.

What type of debts can be reduced on a debt management plan?
Most unsecured debt can be reduced by a debt management plan. This includes credit cards bills, medical bills, department store bills, personal loans, and private student loans.

Will my credit be affected?
Your involvement in a debt management program will be reported to credit bureaus, either by your agency or your creditors. This involvement remains on your credit report until your accounts are fully paid and you are removed from the debt management program.
Involvement in a debt management program shouldn’t directly hurt your credit score but certain lenders may view it as a red flag. This can potentially hinder them from extending a loan to you until your accounts are paid. However, being in enormous debt can also prevent lenders from extending credit to you.

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How much will it cost and how long will it take?
Debt management typically involves a small service fee, but individual companies charge different amount. Individual companies also vary in how long it will take for your accounts to be fully paid.
A good way to gauge how long a company usually takes to pay off debt and how much it will cost you is to ask others who have experience using debt management. If you aren’t familiar with those who have, ask specific companies upfront about their costs and average time from start to program completion. Based on their experience of working with people like you, they should be able to give you a ball-park estimate on both the time and cost.
In the end, a debt management plan aims to do one thing: reduce your debt. For people who can afford to pay off most of their debt, but could use a helping hand when it comes to ridiculous interest charges or late fees, a debt management plan is ideal.