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Debt Management Plan


The term Debt Management Plan is used a lot in the world of helping people to get out of debt. But what this term confusing for debt relief professionals and consumers is Debt Management Plan has many different meanings. It’s apples, oranges, and a whole fruit salad wrapped into one phrase.


In the past a Debt Management Plan was a repayment plan put together by a non-profit credit counseling group. It referred to a specific type of repayment strategy that was commonly only available through one of these consumer credit counseling organizations.

Under this definition the consumer would make one payment each month to the credit counseling group, the group would cut it up, keep their share, and forward the rest to the creditors. Sometimes the Debt Management Plan would also be called a debt consolidation.

The Consolidation Confusion

Because consumers were sending a single lump sum payment to the credit counseling group each month to repay their creditors it was only natural for people to think they were actually involved in a debt consolidation loan. Yet a Debt Management Plan with a credit counseling group is not a loan. It just feels like one.

Gets Borrowed

Some clever marketers of for-profit debt relief programs have labeled their programs Debt Management Plans. And why not. It’s a generic enough term that it could apply to any plan to manage your debt. That may include things like debt settlement, a Chapter 13 bankruptcy could be called a Debt Management Plan, or even a true debt consolidation loan.

One advertisement online says:

Debt Management Plan advertisement

Yet the companies listed on that page are generally for-profit and not non-profit credit counseling groups. – Source

So What’s a Consumer to Do?

Ultimately the only thing an individual can do is play an active role in determining the exact type of Debt Management Plan any for-profit or non-profit debt relief provider is trying to sell. And that’s what they are doing – selling.

There are a few things you can do to not fall into the fake Debt Management Plan trap.

1. Stop. Take a breath and don’t leap for the first magic debt relief sales pitch. Educate yourself first.

2. Take a look at my online Get Out of Debt Calculator to see what the major debt relief options area.

3. Do some damn homework before you sign on the dotted line for services. I can’t express strongly enough that you want to avoid being scammed or later learn you enrolled in the wrong Debt Management Plan then you need to make sure who you are dealing with.

Here are some free guides to help you do that.

Bottom Line – The Exposure of the Debt Management Plan

To avoid being the victim of the wrong Debt Management Plan there is no substitute for you to ask questions and make sure the Debt Management Plan you are considering is actually the best or most appropriate program for you based on your current situation, financial goals, and future financial needs.

If you just sit passively by then the best debt relief sales company will get you to buy their product, even if it’s totally wrong for you.