Debt Management Plan (DMP): A Safe Alternative to Debt Consolidation

You may be familiar with the dangers of a program called bill consolidation or debt consolidation. It’s a program that promises the convenience of making just one payment to cover all of your debt. What they don’t tell you is that this one payment comes in the form of a new loan, and its lower monthly payment will cause you to pay longer and to pay much more money over time. Luckily, there is a better solution—a Debt Management Plan or DMP.

How does a Debt Management Plan work?

A debt management plan through Clearpoint Credit Counseling Solutions allows you to pay off debts to multiple lenders in a way that is convenient, safe, and still brings you added benefits such as lower interest rates. In a DMP, you have the convenience of making just one payment per month, but this is NOT towards a new loan. Instead, Clearpoint divides your payment among each creditor you owe, allowing you to make monthly payments toward each of your accounts.

What concessions do creditors offer in a DMP?

When you enroll in a Debt Management Plan with a nonprofit credit counseling organization like Clearpoint, you are telling creditors that you are serious about paying off debt. On top of this, Clearpoint has worked with literally tens of thousands of different creditors over the course of our more than 40 years in business. And we have proven results with these creditors. They know that if you are enrolled in our DMP, you mean business. While you are enrolled in a DMP, creditors typically offer:

  • Reduction in interest rates
  • Waiver of late fees
  • Waiver of over limit fees
  • Re-aging of an account
  • Lower payments

Again, because of our experience in credit counseling, we can typically estimate what types of interest reductions and other concessions particular creditors will offer. A Clearpoint credit counselor will also work with you to provide budget advice and a free credit report review (with a free FICO score included).

Why is a Debt Management Plan better than debt consolidation?

As a nonprofit organization, Clearpoint values its clients and wants to see each of them succeed. Here are some reasons that our Debt Management Plan is better than debt consolidation:

  • We don’t “force” you onto a plan. Our experienced counselors will know if a DMP isn’t right for you and will explain other options to you.
  • We don’t ask you to take out a new loan, and we don’t encourage you to risk assets. The purpose of our DMP is to help you pay off debt in a safe manner.
  • We give you financial resources. Other agencies just don’t do this. They get you in the door, enroll you in a program, and put you in their system. Is that reliable? Clearpoint offers credit counseling you can trust. We stand with you throughout your journey to becoming debt-free. Along the way we give you financial resources to help you change your habits so you will never be in debt again.

Want proof? Here is a recent success story from a Clearpoint client:

I just wanted to tell you that I am so thankful for the service you and the others at Clearpoint provided for me.

Just over 2 years ago I entered your office with $40,000 of debt and a sense of failure and anxiety that I wasn’t sure my marriage would survive.  We turned over $37,000 to your repayment plan.  I’m now facing the last 12-16 months of repayment with a happy heart.  We made some difficult decisions, changed our lifestyle dramatically, and are living well within our means without accruing any additional debt.

My credit score has also increased to 726, and I just wanted to celebrate by sharing that with your office.  Thank you for the gentle counseling and budgeting assistance, and for the frequent encouragement throughout the process.

Who qualifies for a Debt Management Plan?

Are you familiar with the term debt-to-income ratio? Basically this is about comparing how much debt you have to how much money you make. You can calculate this with our debt-to-income ratio tool. What’s your ratio? If your debt-to-income ratio is under 15 percent, we typically recommend that you follow our ideal spending plan and use one of the self-pay methods of repayment. We recently discussed these methods in our “How to Pay off Debt on Your Own” series.

If your debt-to-income ratio is above 15 percent, you might be getting yourself into some financial trouble. It’s probably a good idea to improve your budgeting habits—make sure you follow a budget each month. Check out our tools, tips, blogs, and videos to learn strategies that will help you become more financially healthy.

And, if your ratio is close to 20 percent, ask for help. We recommend that you let us walk you through a free credit counseling and budget review session. There’s no catch, it’s totally free, and our experienced counselors can make suggestions for your finances.

What’s next?

Clearpoint wants you to succeed in becoming debt free. That’s why we want you to avoid dangerous programs such as bill consolidation. A Debt Management Plan, a safer alternative to debt consolidation, could be for you. We hope we have taught you a little more about how to pay off debt and have given you a better understanding of a DMP. Review your debt-to-income ratio and then:

  • Start paying off debt with a self pay method
  • Read up on financial tips and tools
  • Get started with a free budget review

Thomas Bright is a longstanding Clearpoint blogger and student loan repayment aficionado who hopes that his writing can simplify complex subjects. When he’s not writing, you’ll find him hiking, running or reading philosophy. You can follow him on Twitter.

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16 responses to “Debt Management Plan (DMP): A Safe Alternative to Debt Consolidation”

  • What is the fee for a DMP?

    • Thomas Nitzsche

      Hi Kathy, the fees for a DMP vary by state and sometimes are based on how much debt you have, but they never exceed $50/mo. You should consult with a counselor for the info unique to your situation. You can get started online or by calling 877-877-1995.



    • Thomas Bright

      Great! I suggest giving us a call at 877-877-1995 or filling out our application here:

      Either of those will get you in touch with a counselor who can explain the DMP and review your situation. Best of luck!



    • Thomas Bright


      These are great questions. In general, our clients are unable to use credit while on the program. However, I recommend asking these questions to your counselor so that you get a more accurate answer, based on your situation.

  • Danielle

    Does this plan work for student loans? i am not delinquent with anything, its just hard to keep up with multiple creditors. How is this program reported to the credit bureau? what shows up on my credit report pertaining to the DMP?

    • Thomas Bright

      Danielle, those are great questions. I’d encourage you to arrange a free session because a counselor can help explain more of the details and realistically help determine if the DMP makes sense for your situation. That said, there isn’t a “DMP” mark on your credit report. Instead, you typically close the accounts (asking to have them reported as “closed by consumer”), which is preferable to having the lender close the account. Your use of credit while you are on the program is also usually limited or restricted.

  • Anonymous

    The video on this page (DMP) is “private” and will not play. Please fix

    • Thomas Bright

      Thanks for pointing that out. We just updated the video with a newer version.

  • while on a DMP, if I’m the one enrolling my debt of all my cards (since all the debt is in my name) could my wife add me as an authorized user on one of her credit cards for things like gas/emergencies? We are making better decisions, but I need to rid myself of the old debt that’s been hanging over my head.

    • Thomas Bright

      Great Question Dale,
      I don’t have an answer for this right away, and it might depend on some other specifics–maybe even the authorized user policy of your credit card company. If you ask one of our counselors, they can give you a firm answer. If not, I’ll do some digging and post my findings here as soon as I can.

  • I just need to know if I use the debt Management Plan I can use one of my credit cards, I don’t mean all of them I have 5 I just need one because everything now is with credit cards. Thank u.

    • Thomas Bright

      Hi there, that’s a great question.

      In most cases, you are not allowed to use a credit card while on the DMP, even if that particular card is NOT on the DMP. If you violate this, creditors may take away the benefits and terms they have extended to you.

      There is one common exception: If you have a business card that is not on the plan, you may be able to use it.

      Also, I just want to point out that you can use debit cards. Your counselor will work to build a “cushion” into your budget so that you have money for the things you need. If you don’t want to use cash, a debit card is a great option.

      Great question, please let us know if you have any others!


  • bridging loans uk

    This is a topic that is close to my heart…
    Thank you! Where are your contact details though?