{"id":286935,"date":"2016-04-04T10:41:53","date_gmt":"2016-04-04T15:41:53","guid":{"rendered":"https:\/\/content.findlaw-admin.com\/ability-law\/bankruptcy\/debt-relief\/debt-management-plans.html"},"modified":"2025-08-15T16:42:26","modified_gmt":"2025-08-15T21:42:26","slug":"debt-management-plans","status":"publish","type":"page","link":"https:\/\/www.findlaw.com\/bankruptcy\/debt-relief\/debt-management-plans.html","title":{"rendered":"What is a Debt Management Plan (DMP)?"},"content":{"rendered":"\n
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What Is a Debt Management Plan (DMP)?<\/h1>\n\n
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\n By Susan Buckner, J.D.<\/a> | Legally reviewed by Jordan Walker, J.D.<\/a>\n | Last reviewed\n
\n \n <\/i>\n Legally Reviewed\n <\/summary>\n\n
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This article has been written and reviewed for legal accuracy, clarity, and style by FindLaw\u2019s team of legal writers and attorneys<\/a> and in accordance with our editorial standards<\/a>.<\/em><\/p>\n\n <\/div>\n <\/details>\n\n

\n \n <\/i>\n Fact-Checked\n <\/summary>\n\n
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The last updated date refers to the last time this article was reviewed by FindLaw or one of our contributing authors<\/a>. We make every effort to keep our articles updated. For information regarding a specific legal issue affecting you, please contact an attorney in your area<\/a>.<\/em><\/p>\n\n <\/div>\n <\/details>\n<\/section>\n\n\n

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A debt management plan (DMP) is a structured program you enter through a certified credit counseling agency to repay unsecured debts.\u00a0\u00a0Credit cards, medical bills, and store accounts can become\u00a0one consolidated monthly payment. The agency negotiates with creditors to reduce interest rates and waive some fees, then disburses your payment to them on a set timeline, typically three to five years. DMPs are best for people with multiple smaller consumer debts who can afford a manageable monthly payment. They usually require closing active credit cards while you complete the plan.<\/i><\/p>\n\n <\/div>\n\n\n\n

Before considering debt management programs, it’s important to conduct\u00a0a careful review of\u00a0your options. The\u00a0National Foundation for Credit Counseling<\/a>\u00a0(NFCC) can help you with other alternatives and direct you towards a nonprofit credit counseling agency to assist with your debt management plan. Assessing whether\u00a0a DMP is a viable option is a good idea\u00a0before taking\u00a0the final step to a Chapter 7 or Chapter 13 bankruptcy.<\/p>\n

For more articles relating to debt relief and bankruptcy alternatives, see FindLaw’s\u00a0Debt Negotiation and Settlement<\/a>\u00a0section.<\/p>\n

What Is a Debt Management Plan?<\/strong><\/h2>\n

A DMP lets you make a single\u00a0payment to a\u00a0credit counseling organization<\/a>\u00a0each month, which is then dispersed to your creditors. DMPs are effective for individuals who have accumulated many small consumer debts, such as from\u00a0store credit cards, and fallen behind on their payments.<\/p>\n

Consumers\u00a0can\u00a0enroll in DMPs after receiving a recommendation from a certified credit counselor who has thoroughly reviewed their personal finances. It\u00a0can work as a\u00a0temporary solution in\u00a0certain cases, but is not a\u00a0replacement for\u00a0creating a budget and managing your finances.<\/p>\n

How Debt Management Plans Work<\/h2>\n

Figuring out which debts to pay first, how much to pay each month, and other logistical decisions can be frustrating. DMPs help consumers work off their debt as quickly as possible by leaving these decisions\u00a0to credit counseling professionals.<\/p>\n

In general, you deposit money with the DMP organization each month. The DMP pays a set amount to your creditors. In most cases, creditors agree to waive fees or lower interest rates, since using a DMP ensures regular payments.<\/p>\n

A DMP resembles a\u00a0Chapter 13 bankruptcy<\/a>, as\u00a0you and the credit counselor develop a repayment plan. Like a Chapter 13, you make one payment to the DMP agency, and they disburse the payment to your creditors. In a bankruptcy, eligible remaining unsecured debts may be discharged at the end of the repayment period. Your DMP ends when your creditors receive their final payment. There are also other available\u00a0methods of\u00a0becoming debt-free<\/a>.<\/p>\n

DMPs work best when the majority of your debts consist of unsecured debts. The type of debts handled in DMPs include:<\/p>\n