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Debt Management Solution

Debt Management

Finding a debt management solution for you

If you don't think you can solve your debt problems yourself you may want to consider a professional debt management solution. However, with huge competition in the debt management market finding a solution to suit you, and a reliable company to work with, can be a daunting task.

On this page we give a run down of the different types of debt management program that you can choose from. See our page on choosing a debt management company for tips on sorting the reliable, professional services from the fly-by-night con artists that give the industry a bad name.


Credit Counseling

Reputable credit counselling organizations employ qualified advisors who can help you analyze your financial problems and find a debt management solution to suit you. Credit counselling agencies will often offer to help negotiate reduced interest rates, re-ageing of accounts, or offer budgeting help. Always look for a credit counselling organization affiliated to the National Foundation for Credit Counseling (NFCC) or the Association of Independent Credit Counseling Agencies (AICCCA). Be cautious if the counselor attempts to pass you on to a debt consolidation agent or appears over eager for you to give them authorization to take money out of your checking account.

Debt Management Programs (DMPs)

Credit counselors will often advise debtors to join a debt management program : a controlled repayment of debt agreed between the creditor, the counselor and you. Normally, joining a debt management program has no effect on your credit rating but it may be worth asking your creditor if a note saying you are on a DMP will be added to your credit file. Using a DMP as a debt management solution is not suitable for everyone though, and typically only about one third of people who seek advice from a professional counselor choose or are eligible to join a DMP. This is because some debts (usually unsecured debts) cannot be included in a DMP and because creditors may not agree to the terms of the program.

Debt Consolidation

Debt consolidation is another option and can make sense if most of your debts are to credit card companies. However, with debt consolidation you're entering shark-infested waters. You'll have seen the flashy ads for debt consolidators on every TV channel, on the Internet and heard them on the radio. Debt consolidation companies will rarely have your best interest at heart, they're usually too busy gathering money and new clients to give you any individual attention. Visit our page on debt consolidation to decide if this option is right for you.

Settlement attorneys

A settlement attorney negotiates with creditors in an attempt to reduce the balance outstanding on an account. However, you can do this yourself by calling the company (see our page on debt settlement for negotiating tips on how to do this). Ignore advice that joining a DMP will automatically look bad on your credit rating; in reality, creditors are more likely to mark your credit score down if they have been forced to reduce the overall balance owed simply to avoid a total loss on the account. Generally, using a settlement attorney is a debt management solution you should avoid.


As a very last resort you might want to consider filing for bankruptcy. However, this will have an adverse affect on your credit score for a minimum of seven years. Most creditors will avoid lending you any kind of money until the bankruptcy is removed from your report.