What are the Fees for a Debt Management Program?
What are your fees, if I enroll in your consolidated credit program?
An expert answer from April Lewis-Parks
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.
It’s important to note, nonprofit credit counseling agencies are not here to profit off your hardship – they are here to help you make a plan to get out of debt. By law no debt relief company, including a credit counseling agency, is permitted to charge fees upfront before any service is provided. So the initial consultation to evaluate your debt and identify the right solution in your unique financial situation is free.
Fees only come into play after a client is formally enrolled in a debt management program. Fees are based on four basic factors:
- How much you owe
- How many credit cards you have
- Your income and budget
- Where you live
So the fees applied to a debt management program depend on how much debt is owed, how many credit cards that debt was accrued on and how much the enrollee can afford to pay. State law can also play a part in how fees are calculated and set. However, all fees are capped at $69.
As you can see, fees are not determined by the agency you apply through – the fees you pay for a debt management program don’t vary by credit counseling agency because they’re set by other factors. So there’s little need to “shop around” for an agency based on getting the best deal. Instead it’s about finding a reputable agency that you can trust and feel comfortable to have negotiating on your behalf.
The last important thing to note about fees is you aren’t incurring another bill that has to be paid by enrolling in a debt management program. The fees are rolled into the program so they are included in the monthly payment you make each month to eliminate your debts. The total payment is generally 30-50 percent lower than what you would have been paying prior to joining a debt management program and that’s including the applied fees.