Best Debt Management Programs

Credit card debt is quietly – too quietly! – inching its way back into the financial news headlines and if you haven’t noticed, well, take a look at your bill!

Credit card debt has increased 33% over the last five years and the average American household has a balance of $8,284. Economists say that is only about $172 – or one outing in a clothing store – from being unsustainable.

So, what’s a free-spending consumer supposed to do?

Have you considered a debt management program?

Debt management is a way to eliminate unsecured debt without taking out a loan or risking collateral like your home or car. These programs are ideal for handling credit card debt, but you can include other unsecured debt.

Still, the real selling point of debt management programs is reducing the rate on high-interest loans like credit cards and lowering the monthly payment.

Credit counseling agencies run most debt management programs, often cutting interest rates of 20%-30% down to around 8%, sometimes  less. That lowers the monthly payment to an affordable number and eliminates debt in 3-5 years if the consumer sticks with it.

So, where do you find a good debt management program?

How to Choose a Debt Management Company

Here are the most important areas in choosing the right debt relief company.

• Cost: There’s no need to cripple your finances any further. A good debt management plan should cost from $30-$60 in monthly fees.
• Customer Service: This will be a 3-5 year relationship, so find a company with agents who are courteous and attentive, as well as knowledgeable and supportive. They should be transparent and easy to reach.
• Education: The best companies will also educate you on personal finance and how to budget and manage money so you don’t end up in this mess again.
• Tracking: If you can see progress, you will be more motivated to achieve your final goal. You need easy access to your account balance whenever you call or go online.
• Nonprofit status: Nonprofit debt management companies must prove their actions benefit the consumer, rather than their bottom line. Otherwise, they may lose their nonprofit status. This makes nonprofit debt consolidation companies a safer option than their for-profit equivalents.
• Time in business: Debt consolidation requires competence in a complex field and long-standing relationships with creditors and financial institutions. This means companies that have been around longer often handle accounts with more expertise, expediency, and discretion.
• Effect on credit: Find out what impact the program will have on your credit. Most debt consolidation programs will improve your credit long term, but also may cause an initial dip as you close various cards or wait on interest rate reductions.
• Other services they might offer: Debt management companies offer loads of services to educate consumers, including housing and bankruptcy counseling. Take advantage of any resources that could bolster your financial security. Many often are free!

Start by looking at nonprofit credit counseling agencies certified by the National Foundation for Credit Counseling (NFCC).

A big part of retaining nonprofit status is demonstrating that you care more about your clients than your bottom line. That is where the NFCC comes in. They are the largest and longest serving nonprofit financial counseling agency in the U.S. They certify counselors at 57 agencies. Each must complete a comprehensive training program that guarantees the counselor is qualified to educate and assist consumers with financial advice.

Most companies in the industry are certified, and there isn’t a massive difference in the service cost, so the best gauge might be customer reviews, preferably those with customer reviews from independent sites like TrustPilot.com. People who take the time to write reviews for those sites generally are more honest and trustworthy about how a company operates.

Look for a company that solves your immediate headache and that offers advice, guidance, and recommendations on how to eliminate debt problems and manage money, so there is no trouble in the future.

If the agency you’re considering can’t offer both, move on!

Who Are the Best Debt Management Companies?

Ranking anything – whether it’s best football teams, restaurants, or debt management programs – is a subjective exercise. What is most appealing to us, may be second or third on your list and vice-versa.

Almost every company in this industry is a nonprofit agency accredited by national organizations and regulated by states, imposing fees and restrictions. So cost isn’t always the decisive factor in choosing a company.

These debt management programs offer the greatest value in cost, customer service, education, and industry expertise.

1. InCharge Debt Solutions

BBB Rating: A+

Monthly fee: $29

What to like: The best thing about InCharge is their credit counselors and website. Counselors are knowledgeable, compassionate and focused on budgeting, which is essential in driving down debt. The website is easy to navigate and full of informative, sometimes entertaining topics. You’ll see debt management discussed from all angles, and the progress bar measuring debt paid off is visible any time you view your account.

What to question: They focus almost exclusively on helping with credit card debt. If your problem is with other unsecured debt or so severe that debt settlement or bankruptcy is a better solution, they will say so, but then pass you along to a partner agency.

Customer Reviews: Online reviews are extremely positive. Customers were satisfied with InCharge’s ability to lower the interest rate on credit card debt to manageable levels, often from over 20%-30% down to 9% or lower. However, InCharge’s program requires enough income to cover the monthly payments, and not everyone will qualify.

Summary: InCharge’s counselors are a difference maker. They work hard to get clients on an affordable budget that includes a monthly debt payment. They even direct clients in crisis situations to relief agencies for food, utilities and rent. If you’re embarrassed talking about finances, this is an excellent place to start. As one TrustPilot review said: “No judgment, just help.”

2. Money Management International (MMI)

BBB Rating: A+

Average monthly fee: $25

What to like: MMI has been at it since 1958 and is the largest company in the industry. The variety of choices available on the homepage of their website makes it easy to get right at your problem and find solutions. They offer specialized services on subjects as diverse as home buying, understanding a credit report, and bankruptcy. Webinars and online classes are free. Service is available 24-7, and the website has an option for Spanish.

What to question: In 2011, MMI paid $6.5 million to settle a class-action lawsuit that claimed they were not honest with customers about their close relationship with financial institutions.

Customer Reviews: Most customers are largely satisfied with MMI’s service. Agents are touted as highly organized, professional, and supportive. They provide thoughtful solutions, accounting for your unique situation and finances. Some negative reviews complained of transparency and account setup issues and lamented the process as time-consuming.

Summary: MMI seems equally focused on helping clients get out of debt, while educating them on the subject so they don’t return. That’s a huge benefit to clients. So is the 24-7 customer service availability and service in Spanish. If you’ve got debt-relief problems, this is a good place to find answers.

3. GreenPath Financial Wellness

BBB rating: A+

Average monthly fee: $36

What to like: Plenty of educational material available online, including free webinars, budget tips and online chats. Counselors have won awards for their treatment of clients. The Greenpath University section on the website is a great resource, offering up-to-date articles on relatable financial topics. Greenpath has 60 branch offices in 16 states if you prefer in-person counseling.

What to question: Company’s website could do a better job defining debt management programs. The monthly service fee of $36 is above average, and some clients get charged for credit reports.

Customer Reviews:  Customers were major fans of the simple enrollment process and direct, monthly payments. However, some complained of difficult customer service reps who could be hard to reach.

Summary: GreenPath has a noble goal – “guiding clients toward achieving financial dreams” – and GreenPath University can go a long way in getting them there. Credit counselors are solid and empathetic, and online resources (podcasts, webinars, calculators) are plentiful. Higher than average fees are GreenPaths greatest downside.

4. Consolidated Credit Counseling

BBB rating: A+

Average monthly fee: Based on budget, $40 average, $70 maximum

What to like: The company’s website says they typically reduce the interest rate on debt to somewhere between 0% and 11%. Credit counselors offer advice not just on credit cards but on housing and other personal finance topics. The website lists free seminars by date and time, making it easy to schedule a learning experience.

What to question: Consolidated Credit’s monthly fees are higher than the industry average. If the price is too high, you can still take advantage of its free, financial education center. This is an online resource that includes webinars, workshops, infographics, and credit building guides.

Customer Reviews: Positives include helpful customer service reps who stay on top of accounts and send timely reminders when payments are due. The staff shows empathy and understanding regarding your financial issues. However, some customers were unhappy with their payment schedules and felt Consolidated Credit had not been upfront regarding costs.

Summary: Consolidated Credit offers legitimate debt management services and has aided millions of consumers in escaping debt. Online resources are in-depth and engaging, but monthly fees are higher than average. Many borrowers will find equal or better service elsewhere at lower costs.

5. Cambridge Credit Counseling

BBB rating: A+

Average monthly fee: $30

What to like: Counselors average 14 years of employment with Cambridge, which is phenomenal in this industry. Cambridge’s website says to expect interest rate reductions on credit card debt from 22% down to 8%, which they say will save you $150 a month. There is an abundance of articles, guidebooks and newsletters that educate clients on a wide range of topics.

What to question: Customer support is only open Monday-Friday and closes at 8 p.m. four of those days. Their articles have no dates, making it hard to tell how relevant they are.

Customer Reviews: Easy to reach, transparent, and polite were how customers described the engaging staff and simple enrollment process. On the contrary, others found the process confusing, citing a lack of insight regarding payment schedule and credit score impact.

Summary: Their educational services are thorough and free. Though debt management is their primary focus, they also have housing and student loan departments. Review sites give Cambridge customer service high marks, which is good because they aren’t there on weekends or late at night. Still, a great choice for debt management.

What Is a Debt Management Program?

Debt management programs (or DMPs) are one of three popular solutions for financial problems – debt consolidation loans and debt settlement are the others – and easily the least understood.

A debt management program consolidates all credit card debt into one monthly payment. It attempts to reduce the interest paid on that debt to around 8%, sometimes lower. The monthly payment is sent to a nonprofit credit counseling agency, distributing an agreed-upon amount to each card company.

The goal of debt management programs is to be the go-between for consumers trying to find a way to eliminate debt and credit card companies who want to get paid what they are owed.

DMP companies, mostly nonprofit credit counseling agencies, work with credit card companies to develop a monthly payment plan that the consumer can afford. That usually involves a significant concession on interest rates by the card companies in return for the promise that the consumer will pay off the debt in a 3-5 year period.

Debt management programs are not a loan. Those come from banks or credit unions.

Debt management programs do not promise to reduce the amount owed. Those are debt settlement programs.

Debt management programs are a problem solver for consumers who need counseling on budgeting and managing money. They educate consumers on how to cut expenses or raise income so they can gradually eliminate debt.

How to Enroll in a Debt Management Program

The easiest way to enroll in a debt management program is to call a nonprofit credit counseling agency, preferably certified by the National Foundation for Credit Counseling (NFCC).

You can find a list of nonprofit credit counseling agencies by typing debt management program into a search engine, but a word of caution: Make sure the response you choose is a nonprofit credit counseling agency and NOT a debt settlement company. The debt settlement companies often encroach on the debt management territory, but they are two completely different businesses.

When you call a nonprofit agency, be prepared to answer questions about your income and expenses from a certified credit counselor. The more detail you have about these two areas, the easier it will be for the counselors to offer a solution to the problem. Before talking to a credit counselor, it might be in your best interest to take a look at your credit report (which you can get free from annualcreditreport.com), so you have an accurate picture of who you owe and how much you owe.

The interview with the credit counselor should include a discussion on the root cause of your debt and you should be provided resources that will improve your overall financial situation.

If you don’t qualify for a debt management program – meaning you don’t have enough income to handle your expenses – counselors will direct you toward another solution, which could be debt settlement or bankruptcy.

Is Debt Management Right for You?

Not everyone qualifies for a debt management program. If you go over your budget with a counselor and there isn’t money available to handle expenses, the counselor should advise you that debt management won’t work.

DIY Debt Relief: The counselor may determine that you’ve just been careless about spending and can eliminate the debt yourself by doing a better job with budgeting. The DIY method (Do It Yourself) won’t cost you anything because budget counseling is free at most nonprofit agencies.

Debt Settlement: If your income can’t support your debt, you may be a candidate for debt settlement. This program lets you pay back less than you owe, but your credit score will tank, and you may pile up late fees during the negotiations with your creditors.

Debt Consolidation: This method often involves taking out a loan at a lower interest rate to pay off unsecured debt. It usually takes a decent credit score to qualify, but the process is fast, and funds can hit your account a day after applying.

Again, the counselor’s job at nonprofit agencies is to arrive at a solution that suits your situation, not to sell you on one method over the other.  If you disagree with the solution offered, ask why that is the best choice, or contact another counseling agency and see if they agree.