Debt Management Plan Calculator

How the two paths are modeled

On the plan, your enrolled balances run at the reduced APR, paid down by the amount that reaches your creditors each month: the payment that amortizes the balance over the term, or what’s left of the payment you enter after the monthly fee. The fee is added every month the plan runs, and the setup fee once. On your own, the same monthly outlay runs as an Avalanche at your current rates, highest rate first, with each cleared debt’s payment rolling onto the next. The third line, your minimums only, is what happens if the plan’s payment is more than you could manage without it.

When the plan’s payment is lower than your minimums add up to, which is common, the on-your-own column runs at your minimums instead, because you can’t pay a creditor less than the minimum without falling behind. The calculator says so when that happens.

What a DMP is (and isn’t!)

A DMP repays every dollar. The agency negotiates rates, not balances, and the accounts stay current the whole way through. That separates it from debt settlement, where you stop paying and negotiate to pay less, with the credit damage that implies. Nonprofit agencies, including members of the NFCC (National Foundation for Credit Counseling), are the usual route; for-profit companies sell plans too, and their fees are worth reading twice. Either way, the fee is money that doesn’t pay down debt, which is why this calculator counts it.

What it costs beyond the fee

• The enrolled cards are closed to new charges, so you live without them for the length of the plan. Most people keep one card out of the plan for emergencies.
• Creditors can decline. Each one decides whether to participate and at what rate, and the agency can tell you what yours usually do.
• While you’re enrolled, your credit report can note that an account is being paid through a credit counseling plan. Payments made on time through the plan are reported as on time.
• Plans cover unsecured debt, mostly cards. Mortgages, car loans, and most student loans are usually excluded and keep their own payments.

What this calculator leaves out

Two real benefits of a plan aren’t in the numbers: creditors usually stop charging late and over-limit fees once you enroll, and many re-age past-due accounts to current after a few on-time payments. If you’re already behind, both are worth more than the table shows. The calculator also assumes the plan’s reduced rate applies to every enrolled balance for the whole term and that you make every payment. On the other side, it assumes your current rates hold; a promotional rate that expires would make the on-your-own path more expensive than shown.

Frequently asked questions

What is a debt management plan?

An arrangement a credit counseling agency sets up with your creditors. You make one payment a month to the agency, it pays each creditor, and in return the creditors lower your interest rates and usually stop late fees. The enrolled accounts are closed to new charges. You repay the full balance; nothing is forgiven. Plans typically run three to five years.

Is a DMP the same as debt settlement?

No. On a DMP you pay every dollar you owe, at a lower rate, and your accounts stay current. Debt settlement means stopping payments, letting accounts go delinquent, and negotiating to pay less than the balance, which does real damage to your credit and can leave you with a tax bill on the forgiven amount. The two are often advertised side by side and are not the same product.

How much does a DMP cost?

A monthly fee, typically $25.00 to $50.00, capped by state law and often reduced or waived for hardship, and sometimes a one-time setup fee. Nonprofit agencies that belong to the NFCC (National Foundation for Credit Counseling) publish their fees; for-profit companies also sell plans, sometimes at higher cost. This calculator counts the fees as part of the plan’s cost.

What interest rate will I get on a DMP?

Each creditor sets its own concession rate for plans, and they vary: some go to 0%, most land somewhere under about 11%, and a few decline to participate at all. The agency can tell you what each of your creditors typically offers before you enroll. Enter the rate they quote you, or run the calculator at a couple of rates to see how much it matters.

Does a DMP hurt your credit?

Enrolling isn’t itself a scoring factor, but the enrolled cards are closed, which can raise your utilization, and while you’re on the plan your report can note that an account is being paid through a credit counseling plan. Payments made through the plan on time are reported as on time, and paying balances down helps. Most people on a plan see their scores recover as the balances fall.

Can I get the same result on my own?

Sometimes. You can call each issuer and ask for a hardship rate, and some will grant one for a period. The plan’s advantage is that the concessions are pre-negotiated, apply to every enrolled account at once, and come with one payment instead of several. The “on your own” column here assumes your current rates; if you can get lower rates yourself, run the calculator again with those.

Is anything I type stored or sent anywhere?

No. The calculator runs in your browser. Your numbers never leave this page, nothing is saved, and there’s no account or sign-up. Leave or refresh the page and they’re gone. The Debt Descent app works on the same principle: its App Privacy label is “Data Not Collected.”

How does Debt Descent track a DMP?

With a payment group: one monthly payment, the plan’s fee, and the member debts. Log the payment once and the app splits it across the enrolled accounts to the cent, keeps the fee out of the payoff math, and shows what leaves your bank beside what reaches your creditors. Each debt keeps its own balance and rate. Payment groups are free.

More free tools

• Debt Snowball & Avalanche Calculator: your debt-free date and total interest, both methods side by side.
• Deferred Interest Calculator: what a “no interest if paid in full” promo bills if you miss the deadline.
• Balance Transfer Calculator: whether the transfer fee beats the interest you’d pay by staying put.

All of them run in your browser and send nothing back to me. They come from Debt Descent, my debt-payoff app for iPhone, iPad, and Mac. If you’re weighing it against another planner, I’ve written up Debt Descent vs Undebt.it and Debt Descent vs Debt Payoff Planner.