In the event that the majority of your debt comes from credit cards, there are more options for paying it down than you might think. The debt management plan is one option.

While this might sound like a general approach to managing money, a debt management plan is a specific debt payoff tool. According to NerdWallet, a debt management plan puts you on a payment plan for between three to five years and can cut your interest rate.

What is a debt management plan?

A debt management plan requires you to work with a credit counseling agency. Generally speaking, debt management plans work best for individuals who mostly have credit card debt. Usually, it is most beneficial for people who have unsecured debt between 15% and 39% of their annual income. A debt management plan is best for people who would be able to pay off their debts in a 5-year time span if the interest rates were lower.

Who should not consider a debt management plan?

If you have student loans or medical bills, it is unlikely that a debt management plan will work for you. If your credit is good enough for you to pursue a debt consolidation loan instead, you will probably get lower interest rates and have more control over the amount of time you have to pay off the debt.

If your debt is less than 15% of your income, you may benefit from using the debt avalanche or snowball method. If your debt is more than 40% of your annual income and you do not have a way to pay off your debt within five years, filing bankruptcy is better.