Recent reports in the financial media contend that consumer spending has changed dramatically in the past few years. Before the housing bubble burst, loans and credit were easy to come by and Americans were taking on new debt at a furious pace. But ever since the housing market began its free fall and the recession took hold, consumers have generally focused on saving and trying to pay down the debt they accumulated. For many, though, the combination of high interest rates, the size of their debt and a loss of income have made repayment all but impossible.

High mortgage payments on homes that are now "upside down" in value is certainly a major debt issue, but it may well be that unsecured debt (such as credit card debt and personal loans) is just as serious. With interest rates as high as 29.99% on credit cards, the combined monthly payments can many times approach or even exceed the size of the mortgage payment for many borrowers. In contrast, so-called "predatory" lending very seldom resulted in first mortgage interest rates in excess of even 10%.

Millions of consumers are now searching for answers to their unsecured debt predicaments. Too many of them are only able to make the minimum monthly payment on their debt, which consigns them to extremely long repayment terms. The solution for many borrowers in financial hardship may be credit counseling and a debt management plan (DMP) with its wide array of benefits.

The main benefit of credit counseling, aside from the financial counseling itself, is that the DMP can significantly lower the high interest rates being assessed on the unsecured debt. It is not unusual for some creditors to provide major rate reductions, while other have eliminated interest charges entirely. The effect of these savings is that the payoff time frame for DMP's ranges from just 3 to 5 years.

In addition to the interest rate reductions, a further advantage of a DMP is that over-limit and late fees will no longer be assessed. Clearly this fee relief is at least partially responsible for the curtailed debt-free term realization. Creditors will also report the status of the accounts as "current" when submitting them to the credit bureaus.

Consumers who are stressed out by the constant need to stay on top of payment details (changing due dates, minimum payments, agreement changes, etc.) for multiple accounts will also find relief in the single consolidated monthly payment that a DMP includes. Organization skills that were previously required will no longer be necessary, which is good news for those who aren't meticulous about their record-keeping. Adjusting to one payment on the same day of each month will be a change they should welcome with open arms.

Another concern for many consumers struggling with their debt is the collection phone calls that can become a nuisance for some and a nightmare for others. Since the companies that offer DMP's have close relationships with creditors, they can be very effective at bringing an end to these calls. Just be aware that DMP's aren't tolerant of late payments, and that the collection calls will surely resume if you drop out of the program.

The final benefit that consumers can expect from a DMP is that their credit score will not be damaged. The Fair Isaac Corporation (FICO) states that enrollment in a DMP is not a factor that affects a credit score. The fact that a consumer is paying some of their accounts through a DMP will however be noted on their credit report.