Debt management is a way to get your debt under control through financial planning and budgeting. A debt management plan groups several credit card debts into one payment, cuts your interest rate and creates a 3- to 5-year repayment plan. They are meant to address unsecured debts like credit cards and personal loans. You can’t include priority debts (mortgage or rent arrears, gas and electricity arrears, council tax or rates arrears, court fines, arrears of maintenance payable to an ex-partner or children, income tax, TV license) in a Debt management plan so you need to make sure you’ve got a way to deal with your priority debts before you set up it.

Debt management plans are offered by credit counseling agencies. If you’re thinking of going this route, look for an agency that is accredited by the National Foundation for Credit Counseling. There are both nonprofit and for-profit credit counselors. A credit counselor will help you come up with a plan to repay your debt and can negotiate a payment plan with your creditors. This payment plan is meant to help you eliminate your debts. Depending on your circumstances, your credit counselor may close your accounts as each debt is paid off, to avoid creating any new debt. 

A debt adviser will:


While debt management can be a helpful tool to get debt under control, it can have negative effects on your credit score.

Having all of your debt consolidated into one bill can be beneficial for paying things off.  However, if you close some of your accounts, you’ll affect your credit mix, which makes up 10 % of your credit score, and your credit history, which accounts for 15%.