Improving Debt Management Plan Success

A cartoon of a man wearing a white shirt and orange tie, holding a folder

Meet Leo...

Leo is 30 years old and works as a sales manager for a cleaning company in St. Petersburg, Florida.

Credit cards were Leo’s lifeline during his early adult years, and he didn’t realize how fast the debt was piling up. All of a sudden, he finds himself with $15,000 in credit card debt, $60,000 in student loans, and $10,000 remaining on his auto loan—the car that just broke down.

Leo has been looking for a higher paying job, but hasn’t found one yet. With the end of the student loan moratorium, Leo has become constantly stressed about his financial situation. He tries to keep an emergency fund, but it feels like something always needs repairs.

Leo decides to search for debt management options online and comes across a CCA website offering an online DMP assessment. This is Leo’s first time hearing about this type of debt management solution, and he wants to explore the option.

After potential clients find out about or are connected to a Credit Counseling Agency (CCA), there are important steps they need to take to successfully sign up for a Debt Management Plan (DMP). This includes collecting and sharing personal and financial information to determine DMP eligibility, speaking with counselors, and completing additional paperwork. This process can be daunting, leading many who could benefit from DMPs to drop off before completing the process.

A diagram showing how a consumer shares financial information

Chapter 3.1

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Is a debt management plan right for me?

A cartoon of a man wearing a white shirt and orange tie

Leo is confused as soon as he starts the online assessment. It asks for his credit card debt, but not his student debt, even though his student debt is much higher. He begins to doubt that a DMP is right for him. He quickly clicks through the assessment to see if it is worth his time.

He reaches a section that asks him to list his monthly expenses, which gives him pause. Should he list the car repair? He knows it’s not a recurring expense, but these emergency expenses keep happening—shouldn’t they be accounted for? Leo doesn't see any option to indicate the nuances of his particular situation.

Frustrated, Leo decides to put the assessment on hold, and begins researching debt settlement programs as an alternative.

When a client is unsure about how relevant a product or service is, or how well a provider understands their situation, this can trigger mental models, or deeply held assumptions. In the context of DMPs, several features can lead potential candidates to feel that DMPs are “not for them.” For example, DMPs don’t always account for all the sources of debt that consumers need help with, leading clients to feel that DMPs are not suited to their needs. Online assessments that offer little personalization can exacerbate this feeling.

I think it’s good to have the option to add in your credit cards [along with] any student loans, and then you get that assessment either way. You just pick which one you want. But this one was just straight credit cards. So then I was like, why the hell did I put in all my information? Why didn’t it say this?”

— Real Client Quote

Prospective clients may also struggle to input their income and expenses, particularly when those numbers fluctuate month to month. Without additional guidance on how to approach irregular income streams or account for non-monthly expenses, potential users may question the suitability of a DMP. They may also be confused about the level of detail required—and intimidated at the thought of itemizing all their expenses.

When completing the income section, I [felt] overwhelmed because nothing stays the same every month. So when they ask for monthly income, I’d be like, what about next month? It’s not going to be the same.”

— Real Client Quote

Chapter 3.2

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A hassle-laden sign-up process

Leo decides to give the DMP another try—he liked the nonprofit aspect, and the CCA website felt credible, unlike some of the other options. This time, he begins the assessment with all the information he thinks he will need at hand.

The first thing Leo is asked for is his credit history. Luckily, there seems to be an “import credit” option that will automatically populate this section for him, which he clicks. He soon sees his credit information on the screen, but as he is about to hit submit, he notices multiple errors in the imported data. It will take at least an hour to correct all the errors, a process made worse by the unpleasantness of reviewing his credit data.

Leo would prefer to move forward and fix the credit report data later—right now, he just wants to know if he is eligible! But he is scared that incorrect information will affect his eligibility altogether or impact the terms he is offered. He decides he’ll complete it another day.

Hassle factors refer to the small, often seemingly minor inconveniences or obstacles that can disproportionately hinder individuals from taking action. The DMP sign-up process often feels complex: laden with unclear instructions as well as dense, technical language. This can cause confusion and lead to procrastination or abandonment of the process. Also, the fear of making mistakes can make consumers lose momentum, especially if there is no easy or immediate way to seek support.

When you import my credit report, it doesn’t import everything. Then you have to go back and either input it yourself or make corrections on what wasn’t imported correctly. That’s the annoying part, that’s the part that makes people give up...”

— Real Client Quote

Chapter 3.3

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Surprise costs and far-off benefits

A month goes by, and Leo is still without a solution. “Third time's the charm,” he thinks. He will complete the DMP assessment today, even if it means having to update his credit history manually.

After providing all his information, Leo finally gets to a screen that confirms his eligibility. Excitedly, he begins to review the terms. His projected monthly payment is significantly higher than expected and includes a program fee.

Leo also learns that joining a DMP will require him to close all his credit cards. He panics – for years, credit cards have been his financial safety net.

Despite the longer-term benefits displayed in his DMP summary, Leo worries that the program has high upfront costs that he cannot afford.

Research in behavioral science shows that we tend to value or overweight immediate costs or benefits over future rewards, a phenomenon known as present bias. Being asked to close all credit cards, which DMPs often require, can feel challenging or even impossible for people who rely on them to make ends meet. While this short-term financial strain is offset by long-term savings, this is not always salient or top of mind when consumers are deciding whether or not to sign up. As one CCA staff member shared, “The savings definitely offset the fees in the long run, but people are very focused on the fees. We hear: ‘I can’t even afford to pay my bills, but you want me to pay all of these fees?’”

This problem is further exacerbated when it comes as a surprise – clients told us that they did not anticipate the size of the monthly payment that the DMP would require. Clients may be frustrated if they dedicate significant time and effort to complete the assessment only to see a higher-than-expected price tag. CCAs can explore options to set expectations earlier in the process so clients don’t feel blindsided.

The numbers given to me, the extra [money] I’m going to pay on top of my rent and everything else, it was like…. I’m trying to get out of debt, not add to it.”

— Real Client Quote

I believe that part of this DMP is you can't go into any more debt… so can I just put some of this on a card or something? I think that that would be indirect violation of the terms that I agreed to. Now I’m freaking out because I'm like, then how do I pay this?”

— Real Client Quote

Chapter 3.4

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Design principles to increase DMP sign-up

Drawing from behavioral science research and in collaboration with partner Credit Counseling Agencies (CCAs), ideas42 identified design principles to address barriers and improve the Debt Management Plan (DMP) sign-up process.

Identify opportunities to address anxiety and fear

CCAs should consider reassessing the order in which client information is requested to reduce anxiety and create early momentum. For example, clients told us that it is emotionally draining to think through all their expenses and outstanding debts. Asking applicants about income – generally a simpler, less fraught question — before asking them to detail expenses and outstanding debt could be less overwhelming, making clients more comfortable proceeding.

Because many moments within the application can be challenging, CCAs could offer strategically timed support to get people through those moments, such as a pop-up chat window with access to a counselor or a virtual assistant. Visually salient cues, call-outs, or animations that acknowledge that this is a difficult process can also reduce clients’ sense of stigma and shame, while notifications that highlight their progress can act as additional encouragement.

A questionnaire asking about income and debt, a progress bar showing the customer is almost done, and a chat bubble saying I'm here to help

Make DMPs personally relevant and relatable

Through client interviews and user testing, we found that clients responded positively to examples and stories from individuals of diverse backgrounds who have benefited from DMPs. Showcasing these stories – in sidebars, videos or testimonials – can help illustrate that DMPs are suitable for many people, regardless of their income, debt size, or status, making the plans feel more relatable and accessible.

Personalized experiences can also build rapport and trust. For example, CCAs could refer to applicants by name throughout the sign-up process and in outbound communications. Optional text boxes can offer space for online applicants to share additional information and add nuance to their responses, helping them feel heard and conveying flexibility in the process.

For clients whose situations don't fit perfectly within DMP guidelines, such as those with student debt in addition to credit card debt, CCAs can highlight that they offer support beyond DMPs, such as financial counseling.

Simplify information requests and make the process easy

To help clients feel prepared, informed, and able to navigate challenges, CCAs can share clear, upfront information about what the application process will entail – including the steps, timing, and outcomes. After an application is completed, CCAs can share clear communications about what to expect during counselor conversations and offer explicit next steps to make the process feel more manageable.

CCAs can also explore additional ways to reduce hassles during the assessment process. For example, emphasizing that information can be corrected or adjusted (and making it easy to do so) can increase follow-through. Also, including adding additional guidance that clarifies information requests could reduce clients' mental effort. For example, CCAs could experiment with language that details common household expense categories (e.g., utilities typically include water, gas/heat, and phone/internet; transportation typically includes car payments, gas, parking and public transportation). Applicants could also be guided to estimate non-monthly expenses.

Additionally, CCAs can explore avenues to keep consumers motivated during the assessment process. Access to virtual assistants or a helpline can help consumers when they are stuck and prevent them from pausing the process altogether.

This is off-putting to me personally, because this looks like a huge job. What if I forget, like, oh yeah, I owe pizza palace $800? Is there a way to go back and amend it? And it doesn’t say on the screen, ‘Don’t worry, if you make a mistake, you could come back and amend it later’.”

— Real Client Quote

A screenshot of the expenses page of a website

Highlight the benefits of joining a DMP and recognize key milestones

For many, joining a DMP will require some immediate sacrifices. To address present bias that could deter consumers from joining, CCAs can make the short- and medium-term benefits of a DMP more salient, while highlighting longer-term results. CCAs can also call attention to both the financial benefits (such as interest saved) as well as non-financial benefits (such as peace of mind, a shorter duration to pay off debt, and the ease of making just one payment a month).

One way of doing this is to highlight benefits at relevant moments in the sign-up journey. CCAs can identify key moments during the assessment process that are likely to be challenging for applicants – such as the portion that requests information on outstanding debts – to remind them of what they stand to gain and encourage the applicant to continue moving forward. CCAs can also highlight the completion of key milestones, like completing the online assessment, to capitalize on their sense of pride and accomplishment. Clearly demonstrating the benefits of a DMP versus other alternatives at those critical moments can spur clients to complete sign-up and commit to a debt management plan.

I felt proud of myself… It was just rewarding that I went through the whole process.”

— Real Client Quote

A timeline showing how much customers can save after 3 months, 1 year, 3 years, and 4 years, at which time a customer will be debt-free

Provide flexibility

Where possible, CCAs should provide buffers to help clients manage moments of financial strain. For example, breaking the initial payment or fees into multiple installments, or providing other flexible payment options during particularly difficult months.

3. Sign-Up

Chapter 3

Sign-Up: Encouraging Enrollment in Credit Counseling Programs

Meet Leo...

Chapter 3.1

Is a debt management plan right for me?

Chapter 3.2

A hassle-laden sign-up process

Chapter 3.3

Surprise costs and far-off benefits

Chapter 3.4

Design principles to increase DMP sign-up

Identify opportunities to address anxiety and fear

Make DMPs personally relevant and relatable

Simplify information requests and make the process easy

Highlight the benefits of joining a DMP and recognize key milestones

Provide flexibility

Next Chapter

Repayment