When debt grows faster than income, it can feel impossible to cover rent, utilities, and other bills. For many households, the choice comes down to paying creditors or keeping a roof overhead. A debt management plan (DMP) can help balance those needs. By lowering interest rates, consolidating payments, and freeing cash for rent, a DMP gives families a path to stay housed while paying down debt.
Housing instability is one of the most stressful results of financial trouble. Missing rent payments can lead to late fees, eviction notices, or even homelessness. A structured approach like debt management allows you to put rent first, while still addressing debt obligations and avoiding collection calls.
Debt management also reassures creditors that you are making a good-faith effort to repay. In return, many creditors reduce fees, lower interest rates, and accept smaller monthly payments. This creates space in your budget to prioritize rent, utilities, and food.
Before committing to a debt management plan, review your financial situation carefully. A DMP may be the right choice if:
However, a DMP may not be the best fit if you only have a small amount of debt, if you can already manage payments on your own, or if most of your debt is tied to secured loans like a mortgage or auto loan.
If you are unsure, schedule a credit counseling session to weigh your options. A counselor will review your credit reports, income, and expenses to give you personalized guidance.
A debt management plan combines your unsecured debts, like credit cards, into one monthly payment managed by a nonprofit agency. Instead of sending payments to multiple creditors, you send one payment to the agency, which distributes it.
Creditors who accept your enrollment often lower interest rates, waive late fees, and reduce penalties. This frees money that can go toward rent and utilities.
Read more in Credit.org’s guide: What Is a Debt Management Plan and How Can It Help You?.
Every DMP follows a similar process:
For renters, the key is to stay current on rental payments while the plan starts. Counselors design DMPs to protect your housing stability.
To understand the details of how a DMP works — including your obligations, expectations, and the benefits you can enjoy — explore Credit.org’s Roadmap to Financial Freedom course.
Every debt management plan starts with credit counseling. In this session, you review your income, debts, and financial situation with a trained counselor. They will check your credit reports, explain debt relief options, and suggest next steps.
Credit counseling is typically free. Nonprofit agencies provide services like budgeting guidance, housing counseling, and referrals to rental assistance programs. If you decide a DMP is the right choice, the counselor will help you enroll.
You can request an appointment through Credit.org’s counseling services.
A credit counselor is your main guide throughout a debt management plan. They should be transparent about monthly fees, explain how payments are handled, and answer questions about creditor concessions.
When choosing a counselor, look for:
Credit.org is a HUD-approved agency. Learn more in How to Know if a Credit Counseling Agency Is Legitimate.
A debt management program is not the only option, but it is often the safest for renters. Here’s how it compares:
For a balanced overview, see the FTC’s guide to debt relief and the Credit.org's article on Settlements vs Debt Management Plans.
As a general rule, Credit.org recommends against debt consolidation loans. People think they can repay debt faster with consolidation, but we don't think it's good for your finances to take on new debt. The goal is repay debt, not get new loans. Using a DMP to pay back lenders with a single monthly payment is a better option than going deeper into debt with a new loan.
Most debt management plans focus on credit card debt first. Credit cards usually have the highest interest rates, sometimes over 20 percent. By negotiating lower rates, a DMP frees up cash flow.
For example, reducing a $10,000 balance from a 20 percent rate to 8 percent can save hundreds each month. That money can be redirected to cover rent, utilities, or food.
Enrolling in a debt management plan may initially affect your credit score. Some creditors mark accounts as “managed by credit counseling,” which can appear as a closed account. However, the long-term effect is positive: as you make on-time payments, your credit score improves.
You should also review your credit reports regularly to track progress. You are entitled to free reports at AnnualCreditReport.com.
A stronger credit score makes it easier to qualify for future housing, refinance loans, or obtain lower interest rates.
As your debt management plan progresses, review your credit accounts regularly to track improvement. Looking at balances, utilization, and payment history helps you stay on top of changes. Treat this review as part of your personal finance routine, just like checking your rent or utility bills. Over time, your reports will show steady progress.
Learn more about how a debt management plan affects your credit.
Rent and utilities must remain your top priorities while on a DMP. Communicate openly with your property manager about your situation. Setting up written agreements for rental payments reduces the risk of eviction.
Avoid late fees by automating payments when possible. Keep utility bills current, since shutoffs can make housing unlivable. Counselors will work with you to balance debt payments with these housing-related expenses.
If you are struggling to pay rent while starting a debt management plan, the Emergency Rental Assistance Program (ERA) can help. Funded by the U.S. Treasury, ERA provides payments directly to landlords and utility companies.
To apply, check your local government’s website or call housing hotlines. You’ll need to show proof of income, rental payments, and financial hardship. Some programs also consider income limits and family size.
The ERA program offers more than just help with past-due rent. It can also provide direct financial assistance for utilities and expenses related to housing, such as water bills or energy costs. By covering these services, the program helps renters stabilize their homes while continuing with debt management payments. Families who qualify often find that these benefits buy them the time they need to regain control.
Learn more at the Treasury’s Emergency Rental Assistance Program.
ERA is not the only option. Many nonprofit organizations, local governments, and community agencies offer emergency rental assistance. To find resources:
These services can prevent housing instability while your debt management program gets underway.
A debt management plan only works if your rent and utilities are covered first. Build a budget that places housing at the top. After paying rent, utilities, and food, use remaining funds for debt payments.
Some people find it easier to align payments with paychecks. For example, if you are paid weekly, set aside a portion each week for rent and one portion for the DMP payment.
Credit.org’s guide on prioritizing your monthly bills offers tips on keeping essentials first.
Debt management plans often last three to five years. To succeed, you may need to lower costs across the board. Cancel unused subscriptions, negotiate lower fees with service providers, and reduce discretionary spending.
Lowering expenses related to entertainment or luxury services may not feel easy, but every dollar saved supports your ability to pay rent and stick with the plan.
Life happens, and sometimes you may miss a payment. Call your credit counselor immediately. Most agencies have grace periods or can reinstate your plan if you act quickly.
Avoid ignoring the issue, since creditors may cancel concessions like reduced interest rates if payments stop. Document every agreement and keep receipts for your records.
Older adults on fixed incomes face unique challenges. Social Security benefits may not cover both debt and rising rent. Look into programs like LIHEAP for utility help, SNAP for food, and property tax discounts in your community.
Start with Benefits.gov to see which programs you may qualify for. Staying proactive helps protect housing while making steady debt payments.
Not all debts are included in a DMP. Auto loans and personal loans can sometimes be added, but counselors will review whether it makes sense. If including them raises your monthly fee too high, you may keep these loans separate.
Always ask your counselor how including or excluding a loan affects your overall payment plan.
If your accounts are already in collections, you may still enroll in a DMP. While the plan takes time to start, you can work with debt collectors to hold off legal action.
Remember: debt collectors must follow federal law. They cannot harass you, make false or misleading statements, or threaten actions they cannot take.
Read Credit.org’s guide on what to do if a debt collector calls you. You can also review your rights at the CFPB and the FTC Debt Collection FAQs.
Most debt management programs charge a small monthly fee. While this may seem like an added burden, the savings from reduced interest and waived late fees often outweigh the cost.
For example, lowering a $15,000 balance from 24 percent interest to 8 percent can save thousands over a few years. Those savings give you room to pay rent and stay housed.
If your income changes, notify your credit counselor right away. They can adjust your payment schedule and talk with creditors to prevent disruption.
Some rental assistance programs also require re-certification every few months. Keep records of your income, rent, and payments to show you still qualify under income limits.
Track your progress by keeping a file with letters from creditors, DMP statements, and proof of rent payments. If questions arise later, these records show that you have kept your commitments.
Documentation protects you in case of disputes with creditors, landlords, or utility companies.
Completing a debt management plan is a major achievement. Once your debts are repaid, redirect the money you were paying into an emergency fund. Aim for at least three months of expenses, then grow toward long-term savings.
Revisit your financial goals. Saving for a down payment or investing in retirement accounts becomes realistic once debts are gone. A stronger credit score also opens doors to better housing and lower interest loans.
Credit.org’s Power of Paycheck Planning and Essential Household Budgeting Tips can help you build new habits.
The most important step is choosing a nonprofit agency you can trust. Look for one that provides HUD-approved housing counseling, since HUD certification shows counselors understand both debt and housing stability.
Start with Credit.org’s resources:
External resources include:
With the right help, you can repay debt, save money, and protect your housing.
