More people are seeking help managing their debt — not from extravagant purchases but rather the higher costs of needs like car repairs or medical bills — nonprofit financial counselors report.
Money Management International, a nonprofit credit counseling firm based in Texas, said it counseled nearly 41,000 clients in the first half of the year, an increase of about 10 percent over the same period in 2025. Enrollment in its debt management plans, which help borrowers repay their debt — mostly credit card balances — at lower interest rates, rose to the highest level in nearly a decade.
Consumers are being squeezed by rising costs for basics like groceries, said Ted Rossman, principal consumer finance analyst at Money Management International. “It tends to be practical stuff — day-to-day things outpacing your budget.”
The largest share of people seeking help are in their 30s to mid-40s, with average unsecured debt of about $41,000, Mr. Rossman said. Unsecured debts are loans that lack collateral, like a home or car, that can be claimed if the borrower can’t repay the money.
Yet young adults in their late teens or 20s are the fastest-growing share of the group’s client base, with average unsecured debt of about $20,000 — up 12 percent from 2025. And that total doesn’t count student loans. About 40 percent of young adults seeking the group’s help are also juggling student debt, he said, at an average of $35,000. That suggests that many younger clients “are managing rising expenses, limited cash flow and multiple forms of debt at the same time,” Mr. Rossman said.
Another nonprofit credit counseling group, GreenPath Financial Wellness, reported a 20 percent increase in people seeking assistance in the first half of 2026. Clients often have been struggling with credit card debt for years, but increasingly lack wiggle room to make payments, said Kristen Holt, chief executive of GreenPath. People are using credit cards “to balance the budget,” she said. “Their income is not covering the basics.”
What options do I have if I can’t pay my credit card bills?
You can first try contacting the bank that issued your credit card to ask if it has a “hardship” or payment assistance program. Not all banks offer such programs. But if they do, the programs may offer a temporary — several months or more — reprieve from making full payments in situations like a serious illness, job loss or other emergency, especially if you have a record of on-time payments. But they are unlikely to offer long-term relief.
Credit counseling agencies can help borrowers create a workable budget and, if needed, offer a formal debt management plan. The plan allows clients to combine multiple loans into a single monthly payment at a lower interest rate that the counselor negotiates with lenders. (The reduced rate can be around 7 or 8 percent, compared with a national average card rate of about 22 percent.)
Using the plan, clients pay off the debt over time — often three to five years — by making payments to the credit counseling group, which pays the lenders. The nonprofit agencies typically receive funding from credit card issuers, who benefit by recovering debt through the plans.
The nonprofit groups offer free budget counseling, but typically charge a monthly fee for the management plans. The fees vary. GreenPath’s average, for instance, is about $31 a month. Ms. Holt said even with the fee, clients save thousands of dollars in interest by participating in the payment plan.
GreenPath encourages clients to build an emergency fund to pay for unexpected costs by including a $25 monthly savings contribution in their budget, a spokeswoman said.
What kinds of debt can be included in the plan?
Debt management plans can include credit card balances, medical debt and other types of unsecured debt. Personal loans may be included, Mr. Rossman said, depending on the lender, though some won’t participate. Clients can get budget counseling about student loans, but those loans aren’t eligible for inclusion in the debt management plans.
Money Management has seen an increase in clients with personal loans, Mr. Rossman said, suggesting that people are taking out the lower-cost loans to pay off high-cost credit card debt, only to see their card balances balloon again.
Who is most likely to benefit from a debt management plan?
People who have stable income, but who find themselves juggling payments for several high-rate credit cards, are generally good candidates, debt experts say.
“If your budget shows you can do the debt management plan, they can be helpful,” said Andrew Pizor, a senior attorney with the National Consumer Law Center. The plans’ fees are generally low, he said, and can even be waived, depending on your circumstances.
Rahanatou Souley, 22, a student pursuing a psychology degree and employed part-time as a child-care worker in Carmel, Ind., said she had begun using a credit card to cover costs like her college tuition and wedding expenses, and maxed out its $5,000 limit. Now the mother of a 7-month-old son, she has to pay for diapers, wipes and food. “It’s not cheap.”
She made only minimum payments on the credit card, and said she was alarmed at how quickly her balance grew. She contacted her card company, which referred her to Money Management International. She agreed to a plan under which she pays $183 a month to pay off both that card and a second one with a balance of about $2,500. She said she aimed to make some extra payments so that she could pay off her balance in two years.
Are there drawbacks to debt management plans?
Under the plan, a counselor works with the client to create a workable budget without incurring new debt. Credit cards placed within the debt management plan are closed so the balance can be paid off. But some cards may be retained outside the plan, in case of emergencies or if a card has a low promotional rate.
Clients’ credit scores typically dip at first, but should slowly improve, according to the National Consumer Law Center.
Debt management plans aren’t a quick fix. The plans often take several years to complete, and not everyone can stay the course. About two-thirds of Money Management International’s clients complete their plans, Mr. Rossman said.
How does a debt management plan differ from debt settlement?
Debt settlement firms often operate as for-profit companies and charge higher fees for their services, which tend to be riskier for borrowers, Mr. Pizor said.
Settlement companies typically have clients stop paying their creditors and instead make payments to the settlement company, which tries to negotiate a significant reduction in the total debt balance, while debt management plans focus on helping clients pay off the full principal at lower interest rates. Mr. Pizor said settlement programs tend to have less reliable results, and lenders often won’t negotiate with them. If the debt isn’t ultimately settled, borrowers could end up owing more because of added interest and fees, and their credit may be seriously harmed. They could also be sued by the lender. “Never try debt settlement,” he said.
Do nonprofit counseling groups offer debt settlement services?
Some nonprofit credit counselors are starting to offer versions of debt settlement, mainly for clients with debt that is delinquent or has been sent to a debt collector. Money Management International last year began offering what it calls “debt resolution,” which works much like debt settlement. Clients make payments to Money Management, which aims to negotiate a deep reduction in the debt balance with lenders.
Mr. Rossman said the resolution option was developed as a tool to help clients with debt that has been “charged off,” which typically means the lender has sent the account to collections, or that is likely to be charged off soon, based on the client’s cash flow. “We do not recommend settlement to anyone who is not already — or imminently — in a collection status,” he said in an email.
The plan has more favorable terms than for-profit debt settlement, he said. Clients pay flat fees — a maximum of $100 to start, then no more than $69 a month — rather than a fee that is a percentage of the debt, as is typical with traditional settlement plans, he said. “We also don’t pressure clients to settle or to default to achieve a settlement,” Mr. Rossman said.
He said Money Management expected to be more successful than for-profit firms because “we are only recommending settlement to clients for whom it is an appropriate and viable option.”
Bruce McClary, a spokesman for the National Foundation for Credit Counseling, said the foundation requires that its nonprofit members be accredited and meet its quality standards, but doesn’t dictate what services they can offer. He said several nonprofits are exploring a settlement option as more consumers face financial duress. “More flexibility is needed,” he said, “to address advanced delinquencies.”
The post If You’re Struggling to Pay Day-to-Day Bills, There’s Help appeared first on New York Times.
