Best Debt Management Companies Of June 2024 (2024)

We reviewed 25 debt companies that offer debt management plans to develop our list of the best debt management companies. We analyzed each company on 18 data points in the categories of fees, availability, customer satisfaction and experience, history, digital experience and the number of services provided. We chose the five best debt management companies based on the weighting assigned to each category:

• Fees: 25%
• Availability: 25%
• Customer satisfaction and experience: 20%
• History: 20%
• Digital experience: 5%
• Number of services: 5%

We considered several characteristics within each category, including the fee for debt management, Better Business Bureau score, Trustpilot rating (if available), time in business and links to accreditation industry watchdogs. We also considered whether the company was a nonprofit offering free consultations and credit counseling services. Finally, we evaluated each company’s digital experience based on its mobile app and website. To appear on this list, the organization’s debt management services must be widely available in the U.S.

Debt management plans consolidate unsecured debts into a single monthly payment. Implemented through a consumer credit counselor, these plans can help simplify the repayment process and shorten the time it takes to repay your debt.

How Does a Debt Management Plan Work?

Debt management companies consolidate your unsecured debt and work with creditors to reduce your interest rates or waive fees. To be clear, debt management doesn’t reduce the debt that you owe; it restructures it. With a DMP, you deposit money with your debt management company each month, and the agency uses the money to pay your unsecured debts according to a schedule. It generally takes three to five years to pay off your debts with this type of program.

Though opting for a debt management plan can help you become debt-free, it also has risks and limitations. Here are some examples:

• Doesn’t help with secured debts, such as mortgages
• Credit counseling agencies charge fees for their services
• Usually requires three to five years to pay off debt
• Generally can’t open new credit accounts during the duration of the plan
• No guarantee that creditors will accept the plan
• Plan could be voided if you fall behind on payments

The most legitimate and worthwhile debt management plans are typically offered by debt management companies classed as nonprofit consumer credit counseling agencies. The best of these provide financial education and counseling services from certified counselors. Here’s what to look for when choosing a debt management company.

• Accreditation. To identify a trustworthy counselor, make sure it’s accredited by a reputable organization, such as the NFCC or the Financial Counseling Association of America (FCAA). Also, check with your state attorney general’s office and check the company’s rating with the Better Business Bureau.
• Fees. Confirm that the agency is reasonably transparent about its fees. Though fees may vary by state, the company should at least provide an average cost. Most companies charge a setup or enrollment fee, plus a monthly fee, for their debt management services. Look for the setup fee to be $75 or less and the monthly fee to be $50 or less. Some organizations allow you to negotiate a fee waiver in certain circ*mstances.
• Nonprofit status. If you decide to go the debt management route, be cautious: Not all companies that offer debt relief services are ethical. The most reputable companies in this space tend to be nonprofit organizations, but some for-profit organizations qualify as well.
• Customer satisfaction and experience. It’s essential the company you choose has a long history of satisfied customers. Don’t only look for the company to have a solid score with the Better Business Bureau and sites like Trustpilot, but also read customer reviews. It’s important to know where a company shines and where it falls short.
• Time in business. A longer track record of success typically indicates a company’s ability to work well with creditors.
• Digital experience. If you value online and mobile access, thoroughly vet the company you choose for features like online chat, digital tools and app availability.
• Other services. Agencies often provide an initial counseling session at no charge. Look for a company that provides educational resources and classes on budgeting and managing debt.

It’s important not to sign up for a debt management plan until a certified credit counselor has reviewed your financial situation. Reputable credit counseling organizations can also help you build a budget and refine your money management.

Qualification for a debt management plan usually hinges on the type of debt you have, how much you owe and your overall budget. Debt management companies may only be able to enroll certain types of debt, such as:

• Unsecured credit cards
• Medical bills
• Unsecured personal loans or lines of credit
• Store credit cards
• Unpaid utility bills

Debt management companies typically do not work with secured debts, such as car loans or mortgages, and they often don’t work with student loans or tax debt either.

If you’re interested in working with a debt management company, it’s helpful to know what to expect. Generally, you’ll be asked to complete a free initial session with a credit counselor who will review your finances to assess your situation.

During your initial consultation, your credit counselor will look at what you can afford to pay to determine whether debt management is right for you. If it is, you can take the next steps to enroll in a debt management plan, which includes sharing additional details about your debt and setting up automatic payments to the plan from your bank account.

Consider other options before you settle on a DMP. There are several alternative forms of debt relief:

• Credit counseling. It’s possible you may not need a debt management plan. Credit counselors may be able to help you with your budget, debts and finances without the need to enroll you in a formal program. These professionals can help you create a personalized plan for your debt.
• Debt consolidation. You may be able to use debt consolidation on your own to combine multiple debts into one payment each month. For example, you might use a 0% APR balance transfer credit card or a personal loan to consolidate multiple debts into a single monthly payment.
• Bankruptcy. Also considered a form of debt relief, bankruptcy may help your debt situation. It’s generally considered an option of last resort because it can clobber your credit score.
• Debt settlement. Debt settlement comes with significant risks. You can try debt settlement on your own or with a company. Debt settlement companies generally work to reduce the amount of debt that you owe.

Debt Management vs. Debt Settlement

It’s important to understand the differences between debt management and debt settlement. For example, with debt settlement, the amount of debt forgiven may be considered taxable income. Here are more ways they differ:

Debt management companies

• Choose debts to enroll
• Make a single monthly payment
• Payment is distributed to creditors
• No need for loans or transfers
• May negotiate lower rates or waived fees
• Repay the entire principal amount

Debt settlement companies

• Last resort option; you pay less than you owe
• The remaining balance may be canceled
• A form of debt forgiveness
• Negotiate directly or contract with a debt settlement company (fee involved)
• Typically requires being past due
• More damaging to credit score
• Payments made to separate accounts
• Likely income tax implications

• Best Debt Consolidation Loans Of 2024
• 7 Ways To Consolidate Credit Card Debt
• Debt Relief: What It Is And When You Should Seek It
• What Is A Debt Management Plan?
• Debt Settlement: How It Works And Is It Worth The Risks?