Debt Management Pros & Cons

Debt management is when a debtor hires a credit counseling agency to work out a repayment plan with creditors.  The resulting plan—a debt-management plan (“DMP”)—is usually three to five years in duration and will result in full principal repayment to creditors.  

DMPs are a less aggressive option, at least when compared with debt settlement and Chapter 7 bankruptcy.   Not all forms of debt are eligible.  DMPs are aimed primarily at unsecured debt.  DMPs usually will not accept secured debt, tax debt, medical debt, or student loans. 

  • While entering into a DMP may negatively impact your credit, chances are it will not hurt your credit as much as debt settlement or bankruptcy will.
  • Credit counseling agencies are usually non-profits.
  • The credit counseling agency’s fees are relatively low (usually $20 – $75 per month).
  • You will only have to worry about a single payment to the credit counseling agency to cover the payments associated with those debts you enroll into the DMP.
  • You likely will save a substantial amount in interest charges that otherwise would have accrued.
  • DMPs often include some form of financial education and counseling from a certified financial counselor.
  • Making regular payments towards your DMP can help build (or re-build) your credit rating.
  • You will not have to worry about calls from creditors and debt collectors associated with debts included in the DMP.
  • You need to be on top of it.  If you have debts that are not included in the DMP, you need to remember to pay those debts as required.
  • It takes a while.  In most cases, DMPs last three to five years.
  • The DMP may limit your ability to continue utilizing existing credit accounts and to open new credit accounts.
  • You will fully repay all principal amounts owed.


Call us today at 844-LEGAL-16 (i.e., 844-534-2516) if you would like to learn more about the costs and benefits of Evergreen’s legal plan offerings. 

Disclaimer: The information in this blog post is provided as general information only and should not be construed as legal or other professional advice.  Evergreen Legal Protection is not a law firm.  Never substitute information obtained from the internet or this blog for professional advice and guidance from a legal professional licensed in your jurisdiction.