Debt Management Calculator & Savings Estimator
See how much you could save by enrolling in a debt management program.
Paying off credit card debt isn’t easy – especially when you have high balances and even higher interest rates. A debt management program is a debt relief option that allows you to pay back everything you owe in a way that’s faster and more cost-effective than traditional payments. A credit counseling agency negotiates with your creditors to reduce or eliminate interest charges, making it easier to pay off your debt. In many cases, it can also lower your total monthly payments, so you can balance your budget and get back on track.
What is a debt management program?
A debt management program is a type of professionally assisted debt consolidation. But unlike other types of consolidation, like a consolidation loan, you still owe your original creditors. It’s basically a repayment plan that you can set up through a consumer credit counseling agency. You make one payment to the agency, then they distribute that money to your creditors according to a set repayment schedule.
Why are monthly payments often lower with debt management?
Credit cards have relatively high interest rates compared to other types of credit, like loans. At interest rates of 15% or even 20%, most every payment you make goes to cover accrued interest charges. You may only pay off a few dollars of principal (the actual debt you owe) back each month.
At the same time, minimum payment schedules are not designed to help you get out of debt efficiently. You are expected to pay a portion of your balance each month – usually between 2-5%. This payment structure means that your payments increase as you charge more. At a certain point, the minimum payments get so high that you can’t afford all your bills.
A debt management program offers a huge advantage, because it reduces or eliminates interest charges. The credit counseling agency negotiates with each of your creditors on your behalf and rates are typically reduced to between 0% and 11%.
This means that more of each payment you make goes to eliminate your actual debt. In addition, lower interest charges mean you can get out of debt faster, even though you often pay less each month. A debt management program essentially gives you a more efficient and cost-effective way to repay everything you owe.
This is not settlement! You pay back everything you charged, so it won’t damage your credit; you just do it in a way that’s more efficient because you don’t throw money away on added interest charges.
How much does the average client save?
Monthly savings varies based on:
- How much you owe
- Your negotiated interest rates
- How much you can afford to pay with a balance budget
Data shows that a debt management program reduces a client’s total credit card payments by up to 30-50%, on average. However, monthly savings vary.
Here are a few case studies from real clients of Consolidated Credit who successfully eliminated their debt with our help:
Magalys from Woodland Park, NJ
The best thing I could have done was to make that first call and I’m glad I did. I’m almost debt free. Thank you!
Where she started:
- Total unsecured debt: $24,454.00
- Estimated interest charges: $13,786.94
- Time to payoff: 13 years, 6 months
- Total monthly payments: $978.16
After DMP enrollment:
- Average negotiated interest rate: 2.70%
- Total interest charges: $2,149.04
- Time to payoff: 3 years, 1 month
- Total monthly payment: $710.00
Jorge from Taylor, Mi
The monthly interest amount was reduced to a small fraction of what I was paying before. Thanks!
Where he started:
- Total unsecured debt: $53,937.00
- Estimated interest charges: $31,477.00
- Time to payoff: 15 years, 3 months
- Total monthly payments: $2,157.48
After DMP enrollment:
- Average negotiated interest rate: 2.46%
- Total interest charges: $2,640.90
- Time to payoff: 4 years, 10 months
- Total monthly payment: $985.00
How much does a debt management program cost?
Your initial consultation with a credit counselor is 100% free of charge. That way, you can get a complete debt and budget evaluation, along with recommendations on your best options for debt relief without incurring another bill to pay.
If a debt management program is your best option, then there are nominal setup and monthly maintenance fees to administer your program. Fees vary by the state where you reside, but are capped nationwide at $79. The average debt management program client pays around $35 and this fee is rolled into the monthly program payment. This fee is relatively low compared to other solutions, such as loan origination fees for consolidation loans and fees charged for debt settlement.