Debt Management Program FAQ

Easy answers to all your questions about consolidation with a DMP.

A debt management program consolidates unsecured debt, regardless your credit score. It rolls unsecured debts into one monthly payment and reduces the interest rates so you pay off the principal faster. The savings over the life of a debt management program is typically 30-50 percent of what you would pay on your own with high interest rates.

You can find out more about how a debt management program works here or you can call to speak to a certified financial counselor. In the meantime, the questions below are the most common questions we receive. If you’re struggling with high-interest debt payments, we may be able to help. Take a free debt and budget analysis now to see where you stand.

Q: Who do I owe once I’ve enrolled in a debt management program?

This video explains who you actually owe after you enroll in the program. Short answer – you still owe your creditors; the credit counseling agency just administers payments on your behalf…


People ask that question all the time. They want to know, “Does your program pay off my bills and then I owe you the money?” And it’s a very common misconception, and I think part of it’s because people in our industry use the term “debt consolidation,” which is really only meant to suggest that you’re making one payment.

How it works is actually the opposite. The consumer always owes the money to the original creditor that’s put on the program. The only thing a debt management program does is qualify the consumers for programs that their creditors make available for people who come through these programs to give them better interest rates, in most cases better payments. And they do it, in part, because the risk of you not being able to pay off bills is greatly reduced when you use a program like ours.

The only question left to be seen for each individual consumer is, “Do you qualify for the program?” and that’s what we specialize in doing, in addition to helping you figure out what your other options are.

But you still owe the money to the original creditors. Our program is completely voluntary – you can drop out at any time you want. All of the payments you’ve made still get credited to the original creditor, but now you just need to go back to paying them and your interest rates can and probably will go back up to where they were before.

Q: What types of debt can be included in the program?

The program is predominantly intended to address challenges with credit cards and other unsecured debts. This includes gas cards and department or specialty store cards. In some cases, you may also be able to include other debts, such as unpaid medical bills and even some payday loans. It does not include secured loans like your auto loan or mortgage, or things like federal student loans.

Q: What about debts that are already charged-off and in collections?

Even if your credit cards have been moved to a charged-off status by the original creditor and sold to a debt collector, you may still be able to use the program to consolidate the debt. This video explains how…


Debts in collections absolutely can be included on a debt management program. If it’s with the original creditor, even if it’s not with the original creditor, in a lot of cases we’re able to get the original creditor to accept the payments back again.

Any card that’s closed and you’re still carrying a balance – any payments that you make directly to the creditor will be applied 100% to the balance. The only thing that may vary by account is whether there’s still late fees or interest being applied.

Most of the benefits from a debt management program come before accounts get charged off – basically before an account gets closed is when we can have the biggest effect on saving you money and helping you get out of debt sooner. Once an account’s closed, it’s charged off – the bank has already written it off, but you still owe them the money, it still shows up on your credit report, and you’re still obligated to make payments.

If it’s sold to a collection agency and now someone else owns it, we can still attempt to help you with them, although it’s not a credit card company and it may be a collection agency that we don’t have a relationship with, it’s included in our service for us to reach out to them and try to work out a payment plan for our clients.

The major benefits of the program really come when you’re working with the credit card companies because they have an interest in seeing you rehabilitated, educated, and they want you back as a customer.

BONUS QUESTION:

Credit counseling agencies, in general, do not help with removing things that are accurate from a credit report. And, in fact, if you did owe the money and you were behind on it, and even if you make an agreement to pay it, the credit card companies are obligated to report – not why – but if something happened.

Q: How does a debt management program lower my payments?

With a debt management program, your monthly unsecured debt payments for accounts you put into the program is rolled into a single payment. The amount is based on the amount of debt you have and your budget. After this is determined, your credit counseling team contacts your creditors to agree on an adjusted payment schedule and reduced interest rates. The combination of possible payment reduction and interest negotiation with each creditor allows you to reduce your total payments over the life of the debt management program by about 30-50 percent.

Q: How are program fees calculated and paid?

This helpful ask the expert video explains how fees are assessed and included in the monthly payments made on the program:


We got a great question from Phyllis in Secaucus, New Jersey. She was wondering what our fees were for a debt management program, and we get this question a lot.

Fees vary state by state, as well as the person’s budget, the number of credit cards they have, and the amount of debt they have. The fee amounts can run anywhere from $0 to $69 a month.

The setup fee should be the same amount as your monthly fee, and the fee is incorporated into your monthly payment generally, on most debt management plans. And most credit counseling agencies are pretty standard across the board.

Q: How will enrollment in a debt management program affect my credit score?

In most cases, the effect of a debt management program on the enrollee’s credit is either neutral or positive. As long as you make all of the monthly program payments on time and stick with the program through completion, your credit should not be negatively affected. That’s because you pay all of what you borrowed back on a payment schedule that each creditor agrees to accept. As a result, you build a positive credit history while eliminating all of your unsecured debt. This improves the two biggest factors in credit score calculation, so in many cases enrollees actually see their credit scores improve as a result of enrollment.

Q: How is a debt management program different from debt settlement?

A debt settlement program is designed to settle your debts for less than the full amount owed. You negotiate with the creditor to eliminate the total amount owed for a percentage of that total. As a result, you’re not paying back everything you owe. By contrast as mentioned above, a debt management program pays back everything you borrowed – you just do it in a way that’s more manageable with your budget. So while debt management has a neutral or positive effect on your credit score, debt settlement usually has a negative effect.

Additionally, most creditors won’t accept less than what you owe – this usually only happens once a debt is charged-off and sent to a debt collector. As a result, debt settlement is usually only used for debts in collections. However, as mentioned above, you may be able to include these types of debts in a debt management program along with your accounts that are still active.

Q: Do I have to enroll in a debt management program with my spouse?

You only have to enroll in a debt management program with someone else if that person is a cosigner on one of the credit accounts included in the program. So if you hold cards jointly with your spouse or even with a relative, then you have to join together. This video explains…


Ok, you’re asking a very good question about do a husband and wife need to be on a credit counseling account together, and the answer is it really depends on your situations.

There are reasons why you would want both people on the program and reasons why you may not want both people on the program, and it would really involve me getting to know more about what your individual situation is outside of the debt management program.

The only people who are obligated to participate in the debt management program are the people who are the actual signers on the accounts. These are the people who have signed the loan application, promising the credit card companies that they’re responsible for making the payments.

This is different from an authorized user. You may have a credit card and you could ask the credit card company to give you another card in your husband’s name, and then he’s just an authorized user – he never signed a piece of paper saying that, “If neither of us pay, I’m still responsible for paying.”

If that card is with a bank that you’re also including another card from that bank on the program that’s just in your name, you would have an issue that would affect that card.

The simple answer is, if want to just put your cards on the program you can, we can do the budgeting work just on you, we can do it on you and your household, or we can do both. But in the end, if your name’s on the card you’re the only one who has to join the program.

Q: Are there any downsides to enrollment?

It should be noted that your credit card accounts will be frozen during your enrollment – i.e. you won’t be able to use your cards while you’re paying off your debt on a debt management program. However, that’s a good thing! Adding to your debt load is the last thing you want to do when you’re struggling to pay off the debt you already have. That’s why your credit counselor helps you construct a budget that works to cover your expenses and necessities without relying on credit. You learn to live without credit instead of relying on it as the financial crutch that allows you to scrape by every month.

Q: Can I add accounts to a debt management program after I’ve already enrolled?

It’s advisable to include all of the unsecured debts that you can when you enroll initially, but in some cases an enrollee may choose to leave an account off the program, for things like emergencies. This video explains how these accounts may be able to be included even after you start making payments…


You can add cards to the program after you’re already on it. You just need to be careful about why that card wasn’t put on the program when you first started.

Be aware if you want to leave a card off the program – for whatever reason – it’s extremely important that you talk to your counselor in advance about why you’re leaving that card off the program.

If something unfortunate happens after the fact, you can add it to the program.

Q: What happens once an account is paid off on the program?

This quick and easy Ask the Expert video explains how the monthly payments you make are broken up between your debts and how payment disbursement changes over time as each debt included in the program gets paid off…


So the average person has between seven and ten credit cards on our program. It’s very common for one or two cards to get paid off early on in the program.

It doesn’t lower your monthly payment, we just take the money that used to go to those two credit card companies and we’ll send them to the rest of your creditors.

In general, we’ll usually send them to the creditors that are charging you a higher interest rate. So it saves you more money and gets you out of debt faster.

Q: Do I have any other options besides enrolling in this type of program?

This depends on your specific financial situation. In some cases, a consumer with a high credit score can find other methods to consolidate debt on their own, such as a personal debt consolidation loan or credit card balance transfer. Just be careful, because if you use these do-it-yourself methods in the wrong circumstances, you can actually make your debt problems worse.

As mentioned above, if you have a large number of debts in collections that simply need to be eliminated quickly, debt settlement may also be an option for you to consider if you’re willing to take the damage to your credit score. Otherwise, your best solution may be bankruptcy.

Q: Is a debt management program the same thing as credit counseling?

Not really. In fact, enrollment in a debt management program is actually just one of several conclusions to going through credit counseling – i.e. it’s the last step in the credit counseling process if it’s determined that enrollment is your best option.

Credit counseling refers to the process of consulting with a certified credit counselor to review your budget and debts to determine your best path to achieve financial stability. The counselor helps you find the right solution for your situation. In some cases, this will be enrollment in a debt management program. However, in other cases the counselor may help you reach a different solution.

Don’t wait. Get the help you need today!

As mentioned in the last answer, going through credit counseling doesn’t mean that you’re locked into enrolling in a debt management program. You can get expert advice on your best options to get out of debt so you can find the right solution for your unique needs and financial situation. So the first credit counseling session has no obligations attached to it and it’s 100% free. If you’re facing problems with debt, call Consolidated Credit today at to speak with a certified credit counselor or tell us about your situation through our free online application.

"We are really proud to recommend Consolidated Credit" Kathleen Cannon, President & CEO of United Way of Broward County. Consolidated Credit Counseling Services, Inc. is pleased to announce our partnership with the United Way as a United Way Chairman’s Circle Organization.

"We are really proud to recommend Consolidated Credit" Kathleen Cannon, President & CEO of United Way of Broward County. Consolidated Credit Counseling Services, Inc. is pleased to announce our partnership with the United Way as a United Way Chairman’s Circle Organization.

All Consolidated Credit counselors are certified personal financial counselors (CFC) We've helped 5 million people get out of debt! Call us today and see what we can do for you.

Consolidated Credit is honored to receive the 2012 Excellence in Financial Literacy Education (EIFLE) Nonprofit Organization of the Year award. The EIFLE awards acknowledge innovation, dedication and the commitment of organizations that support financial literacy education worldwide. See what Consolidated Credit can do for you.

Consolidated Credit is honored to receive the 2012 Excellence in Financial Literacy Education (EIFLE) Nonprofit Organization of the Year award. The EIFLE awards acknowledge innovation, dedication and the commitment of organizations that support financial literacy education worldwide. See what Consolidated Credit can do for you.

The National Industry Standards for Homeownership Education and Counseling are a set of guidelines for quality homeownership and counseling services. Industry professionals who adopt these standards can be trusted to provide consistent, high quality advice.
Click here to learn more.

Consolidated Credit Consulting Services, Inc. has been verified as the owner or operator of the Web site located at www.consolidatedcredit.org. Official records confirm Consolidated Credit Consulting Services, Inc. as a valid business. Call us today and see what we can do for you.

Consolidated Credit is a Certified ISO 9001 company, as verified through Bureau Veritas Certification.

Time tested and customer trusted. Consolidated Credit Counseling Services has been a BBB Accredited Business since 1998 and has a current A+ rating. Call us today and see what we can do for you.

View the Consolidatedcredit.org review status

Time tested and customer trusted. Consolidated Credit Counseling Services has been a BBB Accredited Business since 1998 and has a current A+ rating. Call us today and see what we can do for you.

View the Consolidatedcredit.org review status

Consolidated Credit is proud to be an ANAB accredited member. Accreditation by a recognized and respected body such as ANAB ensures the impartiality and competence of our company. To see what we can do for you, give us a call.

U.S. Department of Housing and Urban Development - HUD's mission is to create strong, sustainable, inclusive communities and quality affordable homes for all. Consolidated Credit is proud to be a member of HUD and also part of the Hope Now Alliance.

You can save!

With this amount of debt, you'd pay around $xx.xx on a DMP.

FREE Debt Consultation