How the National Foundation for Debt Management Works

During debt counseling, a family will work with a counselor to hammer out a realistic budget so that their monthly expenses don't exceed their income.
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Has juggling bill payments every month become an extreme sport? Between figuring out the exact minimum payment to make, avoiding the hassling phone calls from collection agencies and transferring balances from credit card to credit card, taking care of your personal finances can seem like a full-time job. It's easy to see how people struggle to stay afloat.

The National Foundation for Debt Management (NFDM) is a non-profit (501(c)(3)) consumer education organization dedicated to educating people about personal finance, home ownership and money management. The foundation concentrates on three areas of financial wellness:


  • Housing counseling
  • Debt and credit management
  • Preventive financial education, even for those as young as age five

The foundation is funded mainly by commissions from creditors working with the foundation's debt management service.

It's free to join the NFDM. To become a member, you can call (800) 353-9890 or go to their web site. Once you are a member, you have access to their seminars and services. Since the foundation's inception in 1999, over 50,000 people have used Right Track, NFDM's debt management program, to help get control over their debt.

In this article, you will learn about NFDM's financial wellness programs, including their debt management programs, housing counseling and other consumer education services.


NFDM Debt Management Programs

Once a person agrees to a debt management program, the agency generally prohibits the debtor from incurring any more debts during the plan.
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If you are deep in debt, the NFDM can help eliminate it through a debt management program. A debt management program can:

  • Assess your financial situation
  • Negotiate with your creditors to lower interest rates, have your fees lowered or waived and your accounts re-aged (from past due to current)
  • Make a payment plan for you

Confirm with your creditors that they've accepted the concessions your agency discusses with you. You're still liable for mistakes or miscommunications between you, your agency and your creditors.


A counselor should meet with you to help you create a monthly budget and assess your debt. The agency will negotiate with your creditors to obtain better terms for you. You make one monthly payment to your debt management program, and it pays your creditors.

Example: Kyle makes a monthly payment of $508 to his debt management program agency. The agency pays his four unsecured creditors.







$150 Visa

$150 MasterCard

$50 Sears

$150 Northwestern Hospital

Make sure the agency is paying your creditors on time. Late payments by your agency will negatively affect your credit.

Typically, agencies only work with unsecured creditors, such as credit card companies or student loan organizations. Ask your counselor how long it will take for you to complete the debt management plan. A schedule should be set up for you. A plan may take four to six years to complete. After you enroll in a debt management program, creditors typically close your accounts and restrict future charges. You may be required to agree not to open up any more accounts or incur more debt.

The NFDM is accredited by both the Better Business Bureau and National Association of Consumer Credit Counselors. They are licensed in most states. It is free to enroll in NFDM's debt management program, called Right Track. The NFDM's Right Track debt management program has helped more than 50,000 people get back on track.

When you enroll in a debt management program, a comment appears on your credit report noting that you are paying your account through a debt management program. Since 1999 Fair Isaac -- the company that developed FICO scores -- has ignored credit counseling comments when calculating a credit score. If you make your monthly payment to your debt management program and the agency pays your creditors on time, your credit score should improve. Sometimes, being enrolled in a program can make getting new credit more difficult. Creditors may decide that you have your hands full with the debt you currently have.

Defeating debt and managing your credit opens doors to creating the lifestyle you want. Learn how NFDM can make your dreams of owning a home come true.


NFDM Housing Counseling and Other Services

A mortgage representative helped this family afford a new home.
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The NFDM offers services to help consumers of all ages learn the basics of homeownership and personal finance. These programs are approved by the United States Department of Housing and Urban Development (HUD).

If you've always dreamed of owning your own home, but are unsure of how to buy a home and how much owning a home really costs, consider a class with the NFDM. The NFDM's classes explain the mortgage process and the different costs of home ownership, like insurance and maintenance. Their programs walk you through the steps of how to be approved for a market-rate mortgage. They'll explain the different types of loans available and help you decide what kind of loan is right for your situation. If you qualify, they'll help you get down payment assistance.


The NFDM offers two series of seminars for hopeful homebuyers. The Homebuyer's Express is designed for people who are close to buying a home. For example, Maria and Manny have $20,000 saved for a down payment, steady jobs and good credit. They are not sure how much of a mortgage they should apply for and how to apply for a mortgage. NFDM will help this couple determine how much of a mortgage they can afford and which type of mortgage works for their situation.

The Homebuyer's Club was created for people who have more preparation to do before they are able to buy a home. For example, Jake and Brittany just got married and are struggling with $12,000 of debt and low credit scores. Their dream is to buy a house where they can start a family. NFDM will help Jake and Brittany put their finances in order to improve their credit score and save for a down payment.

NFDM also provides counseling to help new homeowners manage and maintain their new home, and to help homeowners who are facing foreclosure.

For more information on credit and debt management, visit the links on the next page.


Lots More Information

Related HowStuffWorks Articles

More Great Links

  • "National Foundation for Debt Help" (Accessed 5/21/08)
  • Federal Trade Commission. "Facts for Consumers: Knee Deep in Debt."
  • National Foundation for Debt Management. "Debt Management Programs." (Accessed 5/21/08)
  • National Foundation for Debt Management. "Programs Overview." (Accessed 5/21/08)
  • National Foundation for Debt Management. "What We Do." (Accessed 5/21/08)