Debt management, often known as a consumer credit counseling or a credit counseling service, is a creditor-sponsored program designed to help you pay your debts back. With debt management, you are still paying everything in full with interest. In this program, all the debts are merged into one account so that you only have to make one payment a month instead of having various payments during the month.
It used to be, that in a debt management plan, the credit card companies gave large concessions in the form of very low interest rates. Today, unfortunately, credit card companies do not reduce interest rates as much on this type of program. Depending on where you are right now, you may actually see the interest rates go up.
Additionally, for anyone that gets paid weekly or bi-weekly, it may be harder to pay one monthly payment while keeping current on the other monthly expenses they may have. If you miss a payment in a debt management plan, you may be booted out of the program and may not be able to re-apply for it again or for a significant period of time.
In a debt management plan, all credit cards will be canceled and the ability to take on new credit is not allowed until the program is complete. Also, creditors who are in the debt management plan will not offer more credit while you are still in the program.
In many cases, the payment will go up because the debt management company or credit counseling firm is charging you a monthly fee for their services. The reason for this is that credit card companies are not paying them as much as they used to for the management of this type of program, and there is a lot of overhead associated with it.