Drowning in debt. It’s an expression used often to describe someone who is struggling economically—and it’s a reality that’s all too true for millions of Americans. Fortunately, debt management programs exist to help people get back on track with their finances.
But what is a debt management program exactly?
A debt management program (DMP) is designed to help people unable to pay back insurmountable debt—of which there are many. As of 2020, Experian reported that 95% of adults in the country have a credit card open in their name, while 75% of that have a card balance greater than $0, with the average being more than $5,000—which is the number experts advise is when consumers should seek help.
When you commit to a debt management plan, you’ll work with credit counselors who will negotiate with your creditors to lower your interest rate and consolidate unsecured debt into one affordable monthly payment that’s designed to fit your budget. While this doesn’t include mortgages or loan payments, unsecured debt does include credit cards, medical bills, collections accounts, and personal loans.
DMPs that are consistently followed are usually paid off within three to five years. Another plus? Deciding to enroll in a DMP will rid you of credit collection attempts and, ultimately, help alleviate financial stress.
Aside from paying off your debt, a debt management plan will teach you how to budget your money so that you can manage your financial life better in the future. Over time with consistent payments, you’ll see your credit score bounce back up, making financial well-being your new reality.