Debt Management Can Help You Save Money While Getting Out of Debt

Frequently Asked Questions About Debt Management

• How does a debt management plan impact my credit score?

  A debt management plan is not reported to credit bureaus and does not factor into a credit score. However, your score may initially dip when you close your credit cards. Although people in the program typically see their score increase when they make regular payments on time, the plan is not intended to preserve or improve your credit score, credit history or credit record.

  If your accounts are past due before you enroll in a debt management plan or become past due after you enroll, your credit history may be negatively affected, and/or your creditors may charge off the accounts.

  Other debt relief options, such as debt settlement and bankruptcy, negatively impact your credit score.

• Do I need to have good credit to qualify for a debt management plan?

  No, your credit score is not a factor in determining whether a debt management plan is right for you.

• How do I know if a debt management plan is right for me?

  Completing credit counseling online or over the phone will help us determine if a debt management plan is the right solution for your circumstances. If we are able to work out a balanced budget that accommodates the plan and other monthly expenses, there’s an excellent chance a debt management plan will be your best debt relief option.

• How much does the program cost?

  Credit counseling sessions are always free. If you enroll in a debt management plan, your counselor will inform you of the applicable setup and monthly fee, which is determined by your state of residence. The fees will be included in your monthly debt management payment.

• Which debts can be enrolled in a debt management plan?

  You can enroll credit card debt and medical bills into a debt management plan.

  A debt management plan does not include secured debt, such as mortgages and auto loans, which are backed by collateral. Additionally, it does not include student loans, payday loans or IRS payments.

  If you need assistance with federal student loans, we offer student loan counseling to help you understand and choose from 100+ repayment options and identify the right repayment plan for you.

  If you are struggling to meet your mortgage payments, we offer foreclosure prevention and default counseling.

• Can I still use my credit cards while on a debt management plan?

  The credit cards you place on the debt management plan are generally closed by the creditor. However, we encourage you to close your accounts before starting the program. The goal is to provide you with better repayment terms to help you pay off the debt you currently owe—not to add more debt. Our counselors will work with you to build a manageable budget to avoid incurring additional debt while on the program.

• How long does it take to complete the program?

  Every situation is unique. The length of the plan will depend on a number of factors, including total debt amount, income, accuracy of creditor balances, finance charges and any debt added to the program in the future. Most clients on debt management plans are able to pay off their enrolled debt in three to five years. You may also make extra payments at any time to help accelerate your payoff time and save on interest charges.

• Can I open new lines of credit while enrolled in a debt management plan?

  We recommend that clients enrolled in a debt management plan do not open new lines of credit until the current debt is paid off. Creditors may discontinue your plan benefits if you open new credit. Vehicle and housing loans are unique and may be necessary while you are enrolled in a debt management plan. We will provide lenders with your TCA payment history to assist with such loans upon your request.

• When should I stop sending payments directly to my creditors?

  We recommend you keep your accounts current. The creditors can’t change what they have already billed you for, so we recommend paying the minimum amount due until they have made changes to your monthly billing cycle reflecting the new proposal terms. If you are unable to do so, we recommend you at least cover any difference that is owed to avoid falling past due or incurring any fees.

• What should I do if creditors or collectors call me while on the plan?

  Explain to your creditors that you plan to take part in the program. Once enrolled, you can refer all creditor inquiries to Take Charge America.

• Why does it matter that Take Charge America is a nonprofit organization?

  As a nonprofit organization, Take Charge America works for you. We do not receive incentives from creditors or lenders to steer you in a specific direction. We also do not provide incentives to counselors based on the solution they recommend. We objectively review your finances and recommend the best solution to eliminate debt based on your individual circumstances. Further, we are committed to providing you and the general public with free financial advice and resources to achieve financial independence.

  Since 1987, we have helped more than 2 million people manage and repay more than $6 billion in debt.