Credit card debt can feel overwhelming, but understanding your options is an important first step. These frequently asked questions explain how nonprofit credit counseling and debt management programs work, what they may cost and how they could affect your credit.
Questions About DebtWave
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DebtWave Credit Counseling, Inc. is a nonprofit consumer credit counseling organization. Our certified credit counselors help consumers review their finances, create realistic budgets and explore ways to pay off credit card debt.
DebtWave also offers debt management programs, credit coaching and free financial education resources.
Yes. DebtWave Credit Counseling, Inc. is a 501(c)(3) nonprofit organization and a proud member of the National Foundation for Credit Counseling (NFCC). Our mission is to help consumers eliminate credit card debt, improve their financial habits and work toward long-term financial stability.
No. DebtWave does not provide debt consolidation loans or lend money. We offer credit counseling and administer debt management programs that may help eligible consumers repay unsecured debts under more favorable creditor terms.
DebtWave has provided nonprofit credit counseling and debt management services since 2001. Consumers have repaid more than $325 million in credit card debt through DebtWave’s Debt Management Program.
You can complete DebtWave’s online request form, schedule an appointment or call (888) 686-4040. A counselor will review your financial situation and explain the options that may be available to you.
Speaking with a counselor does not obligate you to enroll in a debt management program.
Credit Counseling FAQs
What is credit counseling?
Credit counseling is a service that helps you understand your financial situation and identify possible solutions to your debt.
During a counseling session, a certified credit counselor may review your:
- Income
- Monthly living expenses
- Credit card balances
- Interest rates
- Minimum payments
- Financial goals
The counselor can then help you build a budget and compare debt-repayment options.
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DebtWave offers credit counseling sessions at no charge. If you qualify for and choose to enroll in a debt management program, setup and monthly service fees may apply.
A credit counseling session by itself should not hurt your credit score. DebtWave may review your credit information using a soft inquiry, which does not affect credit scores.
Enrolling in a debt management program is different from simply completing a counseling session and may affect your credit in several ways.
It is helpful to have recent information about your:
- Monthly take-home income
- Housing and utility expenses
- Credit cards and other debts
- Minimum monthly payments
- Interest rates
- Transportation, insurance and food costs
- Financial hardships or anticipated expenses
If you do not have every document available, you can still speak with a counselor.
No. You can speak with a credit counselor whether your accounts are current, past due or approaching financial hardship.
Seeking help before missing payments may provide more options and help you avoid additional interest, late fees or credit damage.
The process can get started online. However, a credit counselor will need to speak with you over the phone to understand your situation better. This will help provide you the best possible solutions to resolve your debt.
Debt Management Program FAQs
What is a debt management program?
A debt management program, also called a debt management plan or DMP, is a structured way to repay eligible unsecured debt.
DebtWave works with participating creditors to request repayment terms that may include reduced interest rates, lower monthly payments or waived fees. You then make one scheduled payment to DebtWave, and DebtWave distributes the appropriate amounts to your enrolled creditors.
A debt management program is not a loan, and it does not erase the debt you owe.
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The process generally includes the following steps:
- Complete a financial review with a credit counselor.
- Determine which debts may qualify.
- Review your estimated payment, interest rates, fees and payoff period.
- Decide whether you want to enroll.
- Make one scheduled program payment to DebtWave.
- DebtWave distributes payments to your participating creditors.
- Continue making payments until your enrolled balances are paid in full.
Creditor participation and program terms are not guaranteed.
Most DebtWave debt management programs are designed to pay off enrolled debt within approximately three to five years. Certain plans may take longer depending on balances, creditor requirements, interest rates and the amount you can afford to pay.
Paying more than the scheduled amount may help you become debt-free sooner, provided the extra funds are properly applied.
The interest-rate reduction depends on each creditor’s guidelines and your account eligibility. Some creditors offer substantial reductions, while others may provide limited concessions or no reduction. Our average APR typically falls between 6-9%
DebtWave cannot guarantee a particular interest rate. Your counselor should review the estimated terms with you before you enroll.
A DMP may lower your combined monthly credit card payments, but results depend on your balances, creditors and financial circumstances. Our average client see roughly a $200-300 reduction in payment
Lower interest rates can allow more of each payment to reduce principal instead of paying interest. However, the program payment must still be large enough to repay the enrolled debt within the agreed period.
No. A debt management plan generally requires you to repay 100% of your enrolled principal, plus any applicable interest and fees.
Its primary benefit is the possibility of receiving more manageable repayment terms—not reducing the principal balance through settlement.
Debt management programs primarily cover unsecured debts such as:
- Credit card debt
- Retail Store cards
- Certain personal loans
- Unsecured lines of credit
Mortgages, auto loans and other debts secured by property generally cannot be included. Federal student loans, tax debts and payday loans may also require different solutions.
A counselor can review your specific accounts for eligibility.
It may be possible to leave certain accounts outside your plan, but creditor rules and your overall financial situation will affect that decision.
Creditors may require enrolled accounts to be closed, and some may object if you continue using other credit cards. Discuss every account with your counselor before deciding which debts to include.
Credit card accounts enrolled in a debt management program are generally closed to new purchases. Closing accounts may temporarily affect factors used to calculate your credit score, including available credit and credit utilization.
Closing the accounts also removes the temptation to create new balances while you are paying off existing debt.
You generally cannot continue using credit cards enrolled in the program. Depending on creditor guidelines and your circumstances, you may be permitted to keep an account outside the plan for emergencies or business expenses.
Using new credit while enrolled can make it harder to complete the program successfully.
Yes. DebtWave does not require you to remain in the program for the entire estimated term if you can repay your balances sooner.
You can generally make additional payments or pay an enrolled account in full. Contact DebtWave before sending extra funds so they can be applied correctly.
A missed or late program payment may cause a creditor to withdraw its reduced interest rate or other concessions. It could also result in late fees, collection activity or negative credit reporting.
Contact DebtWave immediately if you believe you will miss a payment. Your counselor or customer-service representative can explain the available options.
Costs and Eligibility
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DebtWave’s program may include a one-time setup fee and a monthly service fee. Fees vary based on your state, enrolled accounts and applicable regulations.
A counselor will explain your specific fees before you decide whether to enroll. The potential interest savings should be compared with the full cost of the program.
There is no single amount of debt that makes a debt management program appropriate for everyone. But we recommend at least $7,500 of credit card debt. Eligibility depends on factors including:
- Total eligible debt
- Current interest rates
- Minimum payments
- Monthly income
- Essential living expenses
- Creditor participation
- Your ability to make the proposed payment
A free financial review can help determine whether a DMP makes sense for your situation.
A low credit score does not automatically disqualify you from a debt management program. Unlike a debt consolidation loan, a DMP generally does not require you to qualify for new financing.
The more important question is whether you have enough reliable income to make the proposed program payment.
Possibly. Some past-due accounts may qualify, but available terms depend on the creditor and the status of each account.
If an account has already been charged off, sold to a collection agency or involved in a lawsuit, other options may need to be considered.
Credit Score Effect
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A debt management plan does not have one universal effect on credit scores.
Enrolled credit cards are generally closed, which can initially affect available credit and utilization. Creditors may also add a notation indicating that an account is being repaid through a counseling plan. However, the notation itself is not a credit-scoring factor.
Over time, making payments on schedule and reducing balances may help strengthen your credit profile. Results vary, and no credit-score improvement can be guaranteed.
DebtWave does not control how individual creditors report enrolled accounts. A creditor may add a notation indicating that the account is being managed through a credit counseling program.
You should review your credit reports regularly to confirm that balances and payment histories are being reported accurately.
It may be possible to qualify for a mortgage while enrolled in a DMP, but approval depends on the lender’s underwriting rules, your credit history, income, debt-to-income ratio and payment record.
If you expect to apply for a mortgage soon, discuss that goal with your counselor and prospective lender before enrolling.
Comparing Debt Relief Options
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No. A debt consolidation loan uses new financing to pay off existing debts. You then repay the new lender, usually through one monthly loan payment.
A debt management plan does not provide new financing. Your original creditors retain the debts, while a nonprofit credit counseling agency coordinates a structured repayment plan.
A balance-transfer card may be useful if you have strong enough credit to qualify, can receive a sufficient credit limit and can repay the transferred balance before the promotional rate expires.
A DMP may be more appropriate when you have multiple high-interest accounts, cannot qualify for affordable new credit or need a structured repayment plan lasting several years.
A consolidation loan may be worth considering if its interest rate and fees are significantly lower than those of your existing debts and you can avoid running up your paid-off cards again.
A DMP may be a better fit if you cannot qualify for an affordable loan or want repayment support, potential creditor concessions and budgeting guidance.
Always compare the total cost—not only the monthly payment.
Bankruptcy and debt management serve different financial situations. A DMP requires sufficient income to repay enrolled debts, while bankruptcy may provide legal relief when repayment is not realistically possible.
Because bankruptcy has significant legal and financial consequences, consider speaking with a qualified bankruptcy attorney about your individual circumstances. DebtWave’s educational information is not legal advice.
Getting Started
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Yes. A DebtWave counselor can review your debts, budget and creditor information to estimate your potential payment, interest rates, fees and payoff period.
Estimates are not guarantees. Final terms depend on creditor approval and account eligibility after enrolling.
No. Credit counseling is designed to help you understand your financial position and available options. You are not required to enroll in a debt management program after completing a counseling session.
Start by listing every balance, interest rate and minimum payment. Then create an honest monthly budget that separates essential expenses from discretionary spending.
You can also speak with a DebtWave certified credit counselor for a free financial review and personalized debt-repayment options. Call (888) 686-4040 or get started online.
Active DMP Clients Dealing With Financial Hardship
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Not necessarily.
If your income or expenses have changed, contact DebtWave before your next scheduled payment. We can review your current budget, enrolled accounts, and creditor requirements to determine whether another payment arrangement or program option may be available.
Available options depend on your individual circumstances and creditor requirements, so a lower payment cannot be guaranteed.
There may be situations where a temporary payment adjustment is possible.
However, missing or reducing a Debt Management Program payment can affect payments to your creditors. A creditor could also change or discontinue program concessions, and missed or late payments could affect how an account is reported to the credit bureaus.
Contact DebtWave as soon as you know you may have difficulty making an upcoming payment so we can review your options.
In some situations, yes.
If one enrolled account is making your program payment difficult to manage, or you would prefer to handle a particular creditor yourself, we can review whether that account can be removed while keeping your other eligible accounts on the program.
Removing an account may change your monthly program payment, service fee, estimated payoff date, or other program terms.
Creditor participation and program terms are not guaranteed, and some creditors may take longer than others to review a proposal.
If you're considering canceling because a creditor hasn't accepted the proposed terms, contact us first. We can review the status of each account, explain what has happened so far, and discuss your options for any account that cannot participate.
You may not need to cancel your entire DMP because of one creditor.
It depends on the assistance offered. A creditor may restrict, suspend or close an account as part of a hardship arrangement. Ask what will happen to the account before accepting th
A Debt Management Program is designed primarily for eligible unsecured debts, and not every type of debt qualifies.
Depending on your situation, it may be possible to keep eligible debts with DebtWave while handling other debts separately. Before moving all of your accounts to another program, consider reviewing which debts are eligible for your DMP and which require another solution.
e terms.
Before enrolling, compare the proposed payment with your monthly budget. A lower payment isn't particularly helpful if it is still more than you can consistently afford.
Make sure you understand what type of program is being offered, not just the monthly payment.
A Debt Management Program and Debt Settlement are different approaches.
With a Debt Management Program, you generally repay the principal you owe while DebtWave works with participating creditors for repayment terms that may include reduced interest rates, lower monthly payments, or waived fees.
Debt Settlement generally attempts to negotiate with creditors to accept less than the full amount owed. Debt settlement programs commonly involve stopping or reducing payments to creditors while money is accumulated for future settlement offers. In other words, you will need to become severely delinquent with Debt Settlement.
Before switching, ask the company:
- Is this Debt Management or Debt Settlement?
- Will my creditors continue receiving monthly payments?
- Am I being instructed to stop paying my creditors?
- Are settlements guaranteed?
- What fees will I pay?
- What happens if a creditor refuses to settle?
- How could this affect my credit?
- Could my accounts continue accruing interest or late fees?
- Could I still face collection activity or legal action?
Compare the entire program—not only the monthly payment.
The two approaches work differently.
Debt Settlement companies commonly ask consumers to stop making payments while funds are accumulated for settlement negotiations. Late or missed payments, collections, and other account activity can negatively affect credit reports and credit scores.
A Debt Management Program does not have one universal effect on credit. Enrolled credit cards are generally closed, and creditors control how account information is reported.
If credit is an important part of your decision, make sure you understand how both options work before switching programs.
You can choose to work directly with your creditors.
Before leaving your DMP, however, review the repayment terms you currently receive on each enrolled account. Interest rates, monthly payment requirements, waived fees, or other concessions associated with the DMP may change after an account leaves the program. Once you cancel with DebtWave, we are required to inform your creditors. And some creditors may increase your payments and APRs back to the original terms.
DebtWave cannot guarantee what terms a creditor will offer you after cancellation, so you may also want to contact your creditors directly before making a final decision.
DebtWave works with participating creditors to request repayment terms that may include reduced interest rates, lower payments, or waived fees.
If you leave the DMP, those program-specific concessions may change or end. Your creditors determine what interest rate, payment, and other terms will apply after your account leaves the program.
Before canceling, we can review your enrolled accounts and the current program terms so you know what you may be giving up.
DebtWave does not control how individual creditors report your enrolled accounts.
Your creditors are responsible for reporting account balances, payment history, and any notation associated with participation in a credit counseling program.
If something on your credit report appears inaccurate, compare it with your creditor statements and contact the creditor. DebtWave can also help you review your program payment history.
Possibly. After you payoff an account on a DMP, we strongly encourage clients to roll that payment amount over to the next lowest balance account. If a financial hardship occurs after that, we can lower the payment back down to the original lower amount. This would extend the payoff timeframe originally quoted.
As accounts are paid off or removed from your program, your payment needs may change. Before canceling because your current payment feels too high, contact DebtWave so we can review your remaining balances, creditor requirements, and estimated payoff timeline.
Timing matters.
If a debit or creditor payment is already being processed, it may not be possible to stop it immediately. Funds may also already have been distributed to your creditors.
Contact DebtWave as soon as possible so we can review the status of any pending debit, creditor disbursement, or remaining funds and explain what happens next.
Canceling a DMP does not have one universal effect on a person's credit score.
What happens afterward can matter. For example, changes to your creditor payment terms, missed payments, balances, account status, or collection activity can affect your credit history.
DebtWave does not control how individual creditors report your accounts, and no particular credit-score outcome can be guaranteed.
It may be possible to enroll again, but future eligibility and creditor terms cannot be guaranteed. Creditors typically only offer DMP benefits once for the lifetime of the card.
Your balances, account status, creditor policies, available concessions, fees, and financial circumstances may be different at that time. Contact DebtWave if you would like us to review your situation again.
If you've decided that canceling is the right choice, contact DebtWave at (888) 686-4040.
We can review any upcoming debits, payments that may already be processing, enrolled creditors, and funds associated with your account so you understand what will happen when the program is closed.
Our goal is to make sure you understand your options and can make the decision that works best for your financial situation.
DebtWave Credit Counseling, Inc. is a 501(c)(3) nonprofit organization. DebtWave does not lend money. Program availability, creditor concessions and individual results vary. Information on this page is educational and should not be considered legal or tax advice.