How Much Debt Do I Need For The Debt Management Program?

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There is no minimum debt requirement for a debt management program. A nonprofit credit counseling agency will provide a free credit counseling and budgeting session at any debt level. If a debt management program is the best solution for you, you can enroll with $1,000, $5,ooo or even $100,000 in debt. Unlike other debt relief programs like debt settlement which require a minimum of $10,000 in debt, debt management programs have no minimum requirement.

Each situation is unique, and the only way to figure out if you qualify for a debt management program (DMP) is to take part in a credit counseling session.

Fortunately, credit counseling is free and relatively quick. You’ll find out if you have enough debt to enroll in a DMP in just 20-40 minutes.

Qualifying for a Debt Management Program

Credit counseling agencies have formulas to determine the qualifications of a debt management program. The guidelines state that you need to earn enough money to be able to afford your expenses and a monthly payment to your creditors. The good news is that your monthly payment can be lowered by reducing interest rates with your credit card companies.

There are two situations in which you won’t qualify for a debt management program:

  1. You don’t earn enough income: In this situation, your monthly expenses and debt payment total more than you earn in a month. If that is the case, you can attempt to drastically reduce your expenses with more rigorous budgeting or credit counselors may recommend other debt relief options if the situation is dire.
  2. You earn too much income: If you have a sizable chunk of money left over at the end of each month, that tells creditors that you have the ability to pay off the debt on your own. That may take some financial discipline, but you won’t qualify for any breaks from your creditors through a debt management program.

The process starts with a phone call or online interview in which credit counselors do an overview of your finances and offer free advice on building a home budget. That budget should accurately reflect your income and expenses and help counselors determine whether you’re a good candidate for a debt management program.

A debt management program works best when you have enough income left – after meeting essential household expenses like rent, food, transportation, clothing, etc. – to make a fixed monthly payment on your credit card debt.

Getting to that point sometimes requires massaging the amount budgeted for non-essentials – things like cable TV, eating out, going to the movies, new pair of shoes – but that’s the tradeoff for ultimately reaching debt-free status.

The counselors you’re speaking with are qualified to provide budgeting help  for all levels of income and expenses and be experienced at offering advice on ways to trim expenses so there is more income left at the end of every month.

Why a Debt Management Plan Helps

Every household’s financial situation is unique, thus there is no one blanket solution to throw over all problems and say: “That will fix it!”

However, if you are losing the fight financially and seeking a solution that you can handle with the income you have, you should make a call to a nonprofit credit counseling agency and ask about a debt management plan.

A debt management plan can lower your monthly payments by reducing the interest you pay on credit card debt. It will create an affordable monthly payment that pays off  your debt in 3-5 years. In many cases, consumers see their credit card interest rates cut from 25%-30% to 9%, or even lower.

When Debt Management Is a Good Solution

People routinely ignore the warning signs of financial disaster and hope the situation takes care of itself. That obviously is not a good strategy!

Some of the warning signs include:

  • You are forced to use a credit card to pay for everyday expenses because you don’t have cash available.
  • You have trouble keeping up with multiple due dates.
  • You make only minimum payments on credit card bills.
  • You have excessively high interest rates.

High-interest debt, like credit cards, is the primary reason consumers use a debt management program. In most cases, multiple credit cards are involved, but other forms of high-interest debt like payday or car title loans, medical bills, personal loans and private student loans or any unsecured loan, could be included.

Debt management is a good solution if you can benefit from:

  • Reduced interest rates
  • One fixed monthly payment
  • Monthly statements detailing your progress at eliminating debt
  • Account management software to track payments, balances and interest
  • Counselors to call for support
  • Stopping calls from collection agencies
  • Monthly reminders when payments are due
  • Education on budgeting, managing and saving money

Added Benefits of a Debt Management Program

The goal of every debt management plan is to eliminate your debt, but there are other benefits clients pick up along the way.

Credit counselors work with credit card companies to reduce the interest rates on your cards and to have late fees waived. The average interest rate on credit cards in February of 2020 was 17.35%, but most consumers with financial problems pay 25%-30% or higher interest. Creditors often lower InCharge DMP client’s interest rates to under 10%.

Another benefit is learning how to build and use a monthly budget. Less than 40% of American households operate with a monthly budget, which is the foundation of any successful financial plan. Counselors from a certified nonprofit agency will go through all expenses and income and help devise a budget that reflects what you can actually afford. This is a helpful tool long after you have finished the debt management program.

Finally, there is a delayed benefit to your credit score. At first, your score will take a hit because you must close some credit card accounts. However, by the time you reach the second year of the debt management program, and the number of on-time payments on your credit report has been recorded, your score should improve, sometimes dramatically.

Debt Management Program Alternatives

If you have overwhelming debt, relative to your income, counselors may recommend you pursue another form of debt relief. The goal is for you to achieve lasting debt relief. If counselors determine they cannot provide you with an affordable monthly payment and your debts are too large to pay off in five years, they could suggest you contact other agencies that deal with:

  • Debt consolidation loans – With the right credit score, you could ask a bank or credit union for a debt consolidation loan that would offer a significant break in the interest rate.
  • Debt settlement – This form of debt relief offers high rewards (25%-50% of balance owed is forgiven), but very high risk in that lenders don’t look favorably on consumers who don’t repay what they borrowed.
  • Bankruptcy – If there is no way to pay off your debt in five years, it may be time to seek relief through bankruptcy. This is a chance to start fresh and should not be overlooked.
  • DIY (do it yourself) – Consumers with discipline and a commitment to eliminating debt can take steps themselves to right their financial woes. Be prepared to negotiate terms with creditors and make on-time monthly payments, but you can do it yourself.

Get Help from a Certified Financial Counselor

There’s no one-size fits all solution when it comes to debt. InCharge will provide a free credit counseling session and recommendations based on your personal situation. Whether you have $1,000 in debt or $150,000, a certified financial counselor can help you understand your budget and recommend tools, resources and programs that can help you achieve debt relief.

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. Dilworth, K. (2020, February 26) Average credit card interest rates: Week of Feb. 26, 2020. Retrieved from