Positive Thinking: A Debt Management Plan
A debt management plan is a tailored solution for those having difficulty with credit card, loan or other debts.
When you originally took out your loans and credit cards, you agreed to a repayment that was based on how much you borrowed and also an interest rate.
If you are now struggling to make the agreed repayments, you can seek debt management advice from a specialised debt management company or insolvency practitioner.
While you will be charged for their debt management help, such specialists can offer debt management help and advice on how to make your monthly payments more manageable.
This is where a Debt Management Plan can help.
Get debt management advice now by calling 0800 678 5929
With a debt management plan you work with a debt specialist to renegotiate the terms of your debt repayments with your creditors.
A debt management plan would be applicable for those with at least two debts totalling at least £2,000.
A debt management adviser will look with you at your monthly outgoings and essential expenditures, such as your mortgage, domestic costs, car, food, and clothing.
Any income left after these are paid is termed ‘disposable income’ and can form the basis of your debt management plan by allocating all or part of it to your creditors, to settle your debts.
Debt Management Plan does not write off debt
While professional debt management advice is valuable for putting a debt management structure in place, it will not write off your debt.
Under a debt management plan, your debt will still be payable in full.
However, a debt management plan can significantly reduce your monthly outgoings, and relate your payments to what you can afford, rather than what was being demanded of you before.
Debt management help of this kind usually involves your creditors rescheduling your debt, and can also include freezing your debt, so that no further interest is charged.
However, a debt management plan is a gentleman’s agreement, and not a legally binding agreement. This means that the conditions covering your repayments can be changed at any time by your creditors. If an arrangement to freeze interest is achieved within your debt management plan, it will be on a voluntary basis by your creditors – there is no legal obligation on them to do so.
Under a debt management plan, creditors may agree to reduced monthly repayments on your loan or debt. However, they may choose to apply your reduced payments only to the interest on your account, which will mean that your debt will never be repaid.
It is also important to note that debt management help of this kind changes the original conditions of your credit agreement. For this reason, the debt management plan will be noted on your credit record for 6 years.
Do you need a debt management plan? Ring us now on freephone 0800 678 5929
