Best Debt Management Companies of 2024

Debt management companies help consumers create a structured plan for paying off debt. You might be considering this option if you'd like to streamline your monthly debt payments and save money on interest. We’re comparing the best debt management companies to help you choose the right one.

Debt management companies aren't all alike. Here is a comparison of eight top companies based on services, fees, and overall reputation.

The debt management companies listed here rate the best overall for their service area, types of services offered, and fees. Here's a closer look at how they compare and why they made the cut.

Our recommendations

Best debt Management companies compared

How to choose a debt management company

Choosing a debt management company starts with understanding your situation and what you need help with. As you shop around, here are some of the most important things to consider.

Services

First, look at what the debt management company does. This could include:

• Offering free credit counseling services.
• Helping you get your budget on track.
• Enrolling you in a debt management plan.
• Applying to get you a debt consolidation loan.
• Negotiating with your creditors to resolve your debt.
• Providing bankruptcy advice and how to avoid it.

Some companies offer just one or two services, while others may have a broader range of options from which to choose.

Fees

Next, consider what a debt management company might charge you. It's not unusual to pay a fee that's equivalent to a percentage of the amount of debt you have. For example, you might pay 15% to 25% of your enrolled debt as a fee.

Keep in mind that loans may have separate fees. For example, you might pay an origination fee for a debt consolidation loan. This fee covers the cost of processing the loan and is paid to the lender directly from the loan proceeds.

Customer service

Good customer service can make a huge difference when managing debt. In an inevitably stressful situation, it helps to work with a company that's empathetic and caring.

Reading consumer reviews on the Trustpilot or BBB websites can give you an idea of what people like or dislike about a particular company. Also, consider when customer service is available. Having someone there to answer questions 24 hours a day, seven days a week can be reassuring.

How to apply for a debt management plan?

Applying for a debt management plan is as simple as choosing a debt management company and submitting an application online or over the phone. You'll need to provide some basic information about yourself and your debt, including:

• Your name.
• Date of birth.
• Social Security number.
• Address and phone number.
• Types of debt you want to enroll.
• Balances owed.
• Account numbers and creditor names.

You may need to have a minimum amount of debt to qualify. A debt management company may ask you whether you're still paying your debts or what your overall goal is regarding your debt. Scheduling a free initial consultation can help you decide whether to apply.

Alternatives to Debt Management

Debt management companies can help with debt in different ways. If you don't qualify for debt management or don't think it can help with your situation, you might consider these options instead.

Debt snowball or debt avalanche

The debt snowball method involves paying off your debts, starting with the lowest balance and then going in order to the highest. You pay as much as possible to the smallest debt each month while making minimum payments on everything else. Once you pay off the first debt, you prioritize the next debt on the list. You keep it up until all your debt is gone.

The debt avalanche is similar but with one difference. Instead of paying your debts in order of lowest to highest, you pay them from the debt with the highest interest rate going down to the lowest. This lets you pay off your most expensive debts first, saving you money.

Bankruptcy

Bankruptcy is often seen as a last-resort option for managing debt, but in some cases, it can be the best choice. Chapter 7 bankruptcy will eliminate unsecured debts. The trade-off is that you may need to turn over some of your assets to the bankruptcy court.

Chapter 13 bankruptcy allows you to pay off debts in a structured plan while halting legal actions, including collections or creditor lawsuits. You get to keep your assets in a Chapter 13 bankruptcy.

Talking to a bankruptcy attorney or nonprofit credit counselor can help you determine if and which type of bankruptcy is right for you.

More on debt management

Debt management can help you better handle what you owe, but you should understand the terms before enrolling. Here are a few additional things to keep in mind as you search for debt solutions.

Is debt management right for you?

Whether debt management is the best fit for your needs can depend on:

• The types of debt you have.
• Your amount owing.
• Your overall goal.

A standard debt management plan could be a great fit if you simply want to streamline your monthly payments and have a set end date for paying off debt. As with any debt solution, you must be committed to not taking on new debt.

Pros and cons

Debt management has advantages and disadvantages. The positives include:

• Reducing the number of payments you make monthly.
• Lowering your payments.
• Reducing interest rates and/or fees.
• Paying off less than what's owed.

The negatives could be:

• It can hurt your credit.
• It doesn’t address the root causes of your debt problems.

If you have to close credit accounts to enroll in a debt management plan or stop paying debts because you're trying to negotiate the balances, your credit could be damaged. And if you're not changing the financial habits that got you into debt, history could end up repeating itself.

How to qualify for a debt management plan

Qualification for a debt management plan typically depends on your debt type and how much you owe.

Debt management companies may have a minimum amount of debt they require before they agree to work with you, or they may only accept certain types of debt. Generally, you should qualify for a debt management plan if you:

• Owe unsecured debts, such as credit cards.
• Have $10,000 or more in debt.
• Have enough income to meet the required payments under the plan.

There usually isn't a minimum credit score to qualify, unless you're applying for a debt consolidation loan. Scheduling a free consultation with a debt management company should give you a better idea of whether you qualify.

TIME Stamp: Not all debt management companies are equal, but using one can be helpful

Debt management can be a useful tool to get you back on track financially if you've been struggling to pay off credit cards or other debts. However, it’s important to shop around. Researching different companies is essential to helping you find the best option for tackling your debt.

Frequently asked questions (FAQs)

Does debt management hurt your credit?

Debt management can hurt your credit if you must close credit card accounts or stop paying debts as a condition of enrollment. Some debt management plans may require you to close accounts to prevent you from charging new purchases, while debt resolution usually requires you to be behind on payments. Both of these scenarios can negatively affect your FICO scores.

Does debt consolidation hurt your credit?

Consolidating debt could ding your credit a little if you apply for a loan. A credit application often requires a hard inquiry on your credit report, which can trim points off your score. However, you can recover them by making on-time payments to your consolidation loan each month.

Is it good to use a debt relief company?

Whether it's a good idea to use a debt relief company depends on the help you need and the type and size of your debt. If you're overwhelmed by what you owe and aren't sure what to do, or if you're afraid bankruptcy might be your only option, a debt relief company can help you find solutions. The best debt relief companies prioritize helping their clients get out of debt and are fully transparent about the fees they charge.