be_ixf;ym_202207 d_01; ct_50
Text Size A A A

CESI Financial Blog

Get Debt Consolidation Options

Call Now! (866) 484-5373

Debt Consolidation Loan vs. Debt Management Program: A Side-By-Side Comparison

way out sign

Financial trouble due to past events can be frustrating. Whether your debt built up from misinformed decisions, unintentional missteps, poor judgment or even a lapse in self-control, the past is behind you and it’s time to move forward.

But how do you move forward when the options are so confusing? There are lots of advertisements out there offering you programs that can provide help, relief, and hope. Which one is for you?

One way to compare options is to look at programs’ similarities and differences. Here is a side-by-side comparison between a debt consolidation loan and a debt management program (DMP).


  • Simplification. Having too many creditors can add to your stress, and both a debt consolidation option and the DMP can simplify that for you. Both options usually mean one payment a month—so payments are easier to track.
  • A lower monthly payment. The lower monthly payment for each option is achieved through varying means, but both offer the relief of knowing you’ll pay less each month.
  • Stopping collection calls. When administered correctly, both options are effective at putting an end to the harassment from creditors and collection agencies that may be coming your way.
  • Avoiding bankruptcy. No one wants a Chapter 13 or Chapter 7 on their record. Both a DMP and a consolidation loan can prevent this… at least for now.


  • The purpose. A debt management program requires a lifestyle change, instead of just easing your current pain. A debt consolidation loan is administered by an institution that doesn’t usually counsel you towards these lifestyle changes. When you go down that path of transferring debt from one place to another, you rarely fix the underlying problem.
  • The effect on your credit score. The administrator of a DMP does not report to any credit agency. Being in a program to manage debt might be a factor the credit agencies take into consideration when calculating your score, but your credit counselor isn’t tattling. In fact, as your consistency in the DMP is observed over time, your credit should improve.
  • Use of new credit lines. You may not use credit cards while enrolled in a DMP, though you may when engaged in a debt consolidation loan.
  • Choices. There are many types of debt consolidation loans: personal, credit transfer, or even the kind that uses your home’s equity. There is only one “type” of debt management plan, however, so if you qualify, then you don’t have to choose which kind of program is best.
  • Different interest rates. The consolidation route might get you a better interest rate if the loan is spread out over longer terms, or if you’re using your home as collateral (a risky home equity loan). A DMP, on the other hand, usually achieves lower rates through expert negotiation.
  • Someone in your corner. Your DMP isn’t just a plan, it’s a team effort. A non-profit credit counselor will help you stay on track with support and education— something a loan consolidation solution doesn’t provide.

Getting out of debt is one of the healthiest things you can do, no matter which route you take. But you may want to weigh the pros and cons and chose the route that can help keep you out of debt in the future.

Image Source: Flickr


Leave a Reply

Your email address will not be published. Required fields are marked *


Consumer Education Services, Inc. empowers people to overcome their financial challenges and lead financially-healthy lives.


Debt Consolidation

Financial Education

Homeownership Center

View More of Our Services »


Financial Information about this organization and a copy of its license are available from the State Solicitation Licensing Branch at 919-814-5400. The license is not an endorsement by the State. 

Follow Us

Registered 501(c)(3). EIN: 56-2106758

Consumer Education Services, Inc. © 2022