If your credit counselor cannot figure out a better way to pay back your debts by cutting down your monthly spending and perhaps making more money, the credit counselor may advise that you take part in the debt management plan. If you join in such a plan, the credit counselor will attempt to negotiate for lower monthly payments with your creditor.

Your counselor determines just how much you can actually afford to pay to those unsecured creditors every month in order to eliminate all debts over a three to five year period. Then your counselor meets the creditors to know if they are willing to let you pay only the amounts you can afford. In a few cases, your counselor may also ask those creditors for additional concessions, like lowering your current interest rates and waiving or reducing any fees you currently owe to them. If the unsecured creditors believe that affording you what you need is simply their best shot at obtaining the money you owe, and certainly if they think you will file for bankruptcy (it means they will not get even a cent from you), they may agree to the debt management plan, proposed by your credit counselor. Even so, most large creditors usually set a minimum amount that you should pay each month; and unless you commit to paying your debts, they may not agree to take part in your plan. If some of the creditors refuse to cooperate in this plan, you need to continue paying them based on the original agreements you have with them.

Most creditors agree to offer special concessions to people who pay off their debts with a debt management plan. Of course, they expect that the consumer will not incur more debts while still participating in the plan.