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Debt Management Programs

If you find you need more help, a debt management firm can help you design a formal debt repayment plan. The company negotiates with your creditors to lower your interest rate and payment amount. You make monthly payments to the debt management company, which then distributes payment among your creditors.

Debt management companies charge for their services, including upfront fees and ongoing management fees. Even nonprofit companies may charge hefty fees. Be sure to ask about how much you’ll pay each month in addition to your debt payments.

If you decide to work with a debt management company or advisor, ask these questions to compare programs:

• Do I have to pay fees on top of my debt payment? How much are they?
• When do my payments begin to be applied to debt balances instead of fees?
• What percentage of clients remain in the program until their debt is entirely repaid?