What Do I Need To Know Before Joining The Debt Management Program

Home » Credit Card Debt Relief » Debt Management » What Do I Need To Know Before Joining The Debt Management Program

What Is a Debt Management Program?

A debt management program (DMP) is a structured repayment plan offered by a nonprofit credit counseling agency that consolidates credit card payments and other unsecured debt into one, affordable payment. It can help you pay off your unsecured debt in 3-5 years. Interest rates may be reduced, making monthly payments affordable.

Nonprofit credit counseling agencies such as InCharge Debt Solutions set up and manage DMPs. The National Foundation for Credit Counseling (NFCC) is a nonprofit network of nonprofit agencies that vets its members, including InCharge, under accreditation guidelines.

What Are the Benefits of a DMP?

A debt management plan will help you create a budget aimed at paying off credit card debt in 3-5 years.

Benefits of a DMP include:

  • Interest rates may be reduced by creditors
  • Affordable monthly payment based on your budget and available discretionary income
  • Fixed interest rate for the length of the program
  • Faster payoff time
  • Recent late or over-the-limit fees may be waived
  • Ongoing collection attempts will be reduced
  • One monthly payment
  • Professional counseling from a certified credit counselor
  • No loan is involved
  • Credit scores aren’t a factor

Is Debt Management Different from Debt Consolidation?

Debt management programs differ from other debt consolidation programs in two ways:

  • A debt management program is not a loan.
  • A debt management program does not reduce the amount owed.

Here are other forms of debt consolidation compared to debt management.

Debt Consolidation Loan

This loan is taken from a bank, credit union or online lender and used to pay off several unsecured loans, such as credit cards.

Qualifying for one large loan can be difficult unless you have a very good credit score. If you qualify, your interest rate and payment should be cheaper than for the credit card.

One big problem with a debt consolidation loan is that you still owe the lender. It’s moving the money owed from one source to another. If you’re spending habits don’t change, you may be in trouble with credit card debt again in short order.

Debt Settlement

This is where you, or a for-profit debt settlement company, try to get your creditors to accept less than the full amount owed to satisfy a debt. Why would they accept less? Because you’re offering a lump sum of cash. That’s much more enticing to a credit card company than getting nothing.

A debt settlement company will recommend that you stop paying your creditors and instead put money in an account that you control. When the settlement company thinks you have enough cash in the account to negotiate, it tries to make a deal with each of your creditors.

This can be a risky option. Some companies refuse to deal with debt settlement. There are fees for the service and you likely will pay late fees for withholding and have that added to the amount you owe. Your credit score will fall, and it will be hard to get a loan in the future because you didn’t pay back this one in full.

Another downside: You’ll have to pay income taxes on any amount settled for $600 or more. That can leave you owing more money when filing your taxes.

How Long Does a DMP Stay on Your Credit Report?

A debt management plan isn’t listed as a separate account on your credit report.

Closing your cards at the onset of a debt management program can have a negative impaction your shore, initially, but if you make your DMP payment consistently (on time), you should see your score recover. Remember, the key to healthy credit is having low debt levels and making on-time payments. Many clients find they have scores in the 700s around the time they complete their program.

Once your credit account is paid in full, a DMP designation should disappear. If you made on-time payments, then your credit score should improve. Both of these factors make paying off credit cards through a debt management program better for your credit score than trying debt settlement.

What Special Services Does InCharge Offer as Part of a DMP?

InCharge’s debt management program starts with a credit counseling session to determine if a debt management program is the best solution to your problems. The session can be done online or over the phone.

Here are some of the special services InCharge offers in a DMP:

  • Access to online resources, and by phone with a certified credit counselor.
  • Choose the most convenient day of the month to make your payment.
  • Funds are withdrawn electronically from your bank account.
  • Plenty of consumer information and education materials provided to help you complete your DMP

Why Are Creditors More Inclined to Offer Lower Interest Rates to InCharge?

Creditors understand that a structured debt management plan will provide the foundation for a consumer to successfully repay their debts.

Even at a lower interest rate, creditors are getting the money owed and that’s better — for everyone — than sending the account to collections.

Creditors may also see it as a sign of good faith by someone who is trying to pay off their debts and ultimately improve their credit. That’s a key part of a debt management program. It allows you to climb out of a financial hole and raise your credit score by making timely payments again.

When Will My Debt Management Plan Start?

InCharge’s credit counselors will talk with you about the best starting date for a debt management program. They’ll review your accounts and come up with a payment schedule you can afford. Then they can help you decide on a start date.

You may want to set it to start close to your payday. Or you may want payments to be on the 20th of the month, for example, because that’s when most of your other major bills are paid off and you have enough money to make your payment.

It’s also important to know that the DMP doesn’t start until the day you make the first payment.

Here’s how that can affect you: Suppose you chose the first day of the month a starting date.  You get paid a few days before then, so it makes sense to make your DMP payment when a new month begins.

But it’s now the middle of the month and you have a credit card payment that’s due on the 20th. Don’t wait until the first day of next month to make that payment. Make that payment to the credit card company by the 20th or you will incur a late payment fee.

Can I Add My Partner or Spouse to My Account?

Yes, but both of your names must to be on the accounts. Simply sharing the payment of bills isn’t enough.

If both names are on the accounts (therefore you’re jointly responsible for the bill), then it’s just a matter of agreeing to the terms of the joint debt management program and each of you signing it.

If both names are not on the accounts, InCharge will enroll each of you individually. The resulting benefits should be similar to a joint account.

I May Not Have Access to All My Creditor Information. Can I Still Enroll?

Yes, absolutely. InCharge’s credit counseling software allows us to pull a portion of your credit file and import the creditor information directly into your InCharge account.

Once you’ve authorized this step, all of the current balances and account numbers of your unsecured credit accounts will be pulled into your InCharge credit counseling account. The information will be reviewed and analyzed as you work with a counselor on a budget. This is a “soft pull” on your credit report and will not affect your credit score.

What If Creditor Accounts Are in My Maiden Name?

As long as you have identification — a driver’s license, birth certificate or marriage license — you can enroll in InCharge’s debt management program.

During your consumer credit counseling session, give your counselor your maiden name to avoid any confusion. As long as you can verify that these accounts are yours and that you’re responsible for the money owed, they can be added to your InCharge debt management program.

Get Your DMP Started with InCharge

If you’re ready to enroll in a debt management program, you can contact an InCharge credit counselor to begin the process.

It’s easy and starts with speaking with a credit counselor to determine if you can join InCharge’s debt management program. Credit counseling can be done online or over the phone.

Our nonprofit credit counseling is confidential. All your records are kept in a secure location, and your financial information won’t be shared with anyone unless we have your written permission.

And to hopefully give you more confidence about how much we value your private information, InCharge doesn’t report your financial information to the IRS or any of the credit reporting agencies.

About The Author

Tom Jackson

Tom Jackson focuses on writing about debt solutions for consumers struggling to make ends meet. His background includes time as a columnist for newspapers in Washington D.C., Tampa and Sacramento, Calif., where he reported and commented on everything from city and state budgets to the marketing of local businesses and how the business of professional sports impacts a city. Along the way, he has racked up state and national awards for writing, editing and design. Tom’s blogging on the 2016 election won a pair of top honors from the Florida Press Club. A University of Florida alumnus, St. Louis Cardinals fan and eager-if-haphazard golfer, Tom splits time between Tampa and Cashiers, N.C., with his wife of 40 years, college-age son, and Spencer, a yappy Shetland sheepdog.


  1. N.A. (ND) Debt Management Plans. Retrieved from https://www.nfcc.org/what-we-offer/debt-management-plans/