What It Is

• A debt management program is a structured plan for repaying unsecured debts such as credit cards and personal loans.
  
  

How It Works

• You work with a credit counselor or debt management company to create a creditor-approved repayment plan. A single payment is made to your plan's administrator, who then distributes the funds among your creditors.
  
  

Benefits

• With a debt management plan, your payments are structured so your debts are repaid within approximately three to five years. Creditors may also lower your interest rate and eliminate fees while you are enrolled in the program.
  
  

Who Should Use It

• Debt management may be right for someone who has a significant amount of debt and needs help managing their payments but does not qualify for debt consolidation, debt negotiation, or bankruptcy.
  
  

Warning

• Your creditors may request that your accounts be closed while you are on the plan, which will result in a lower credit score. You also cannot apply for any additional credit while you are in the program.