Are Debt Management Plans Effective? | CCCS of Chattanooga
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Are Debt Management Plans Effective?

No one sets out to incur mountains of debt. But a little at a time, or perhaps all at once when an emergency hits, suddenly, you can’t keep up with your monthly payments. It might even begin to seem like there are no options besides drowning in debt or declaring bankruptcy. But there is always a way out. And just remember—you’re not alone.

We’re serious. Experian reported that 95% of adults in the country have a credit card open in their name, while 75% of those have a card balance greater than $0, with the average being more than $5,000 as of 2020. Most experts agree that having $5,000 or more in debt means it’s time to seek credit counseling. So, if you’re asking yourself: Does debt management work? We’ll tell you all about it. 

Debt management plans work by allowing borrowers to consolidate unsecured debt and pay them back in a shorter amount of time, in three to five years. This can include credit card debt, medical bills, and unsecured loans. While those are both great benefits, your credit counselors will also work with creditors to knock down your interest rate, which can mean you’re paying significantly less.

While mortgage loans and car payments aren’t factored in, a debt management plan is designed so that you will only be paying one affordable monthly payment for any credit card debt or other unsecured loan debt included in your plan. For many, not having to shuffle numerous bills and dodge creditor phone calls can help alleviate financial stress.

Debt management plans come with some caveats: While paying off your debt, only use a credit card for emergencies; use the time to clean up your financial bad habits; and finally, enjoy life as you move on to increasingly debt-free pastures.