A debt management programme is a formal agreement between a debtor and creditor(s). Debt Management Plans help reduce outstanding, unsecured debts at a reduced level over a fixed period of time to help regain control of finances
In a debt management program (DMP), the debt management agencies work together to lower the interest rate on the loans and credit card account with a hope and understanding that it will lower the monthly payment and causing more funds to go towards paying off the principal instead of the interest charges. The result of this is faster payoff of enrolled debts, within 60 months.
The payments from differentaccounts like loan and credit cards etc are consolidated into one payment and are paid to the credit counsellingagency who is undertaking the debt management programmewho then distributes the payment to each creditor based on a scheduled repayment plan. Debt management consultants usually charge a set up fee and a small monthly fee to sort this and they send out proposals to all creditors to propose new payment arrangements.
Get out of debt at a pace you can afford
• Your debt manager will deal with your creditors
• Freeze or reduce interest and charges on
• Stop demands / harassment from your
• Take control of your debts without taking
any more loans
• Get a clear, affordable path out of debt
• No recovery and collection calls
• Get your debt settled, if qualified we can
waive off upto 70% of your debts
• You will not have to sell your house or
things which you own to pay your unsecured
• Chose your EMI yourself and make payment
according to your pocket
The purpose of a debt management plan is very basic and very simple: to recollect the control of your finances without compromising the basic standard of living costs. Many people usually file for bankruptcy because they can no longer afford to pay both their creditors and their living expenses. With a solid debt management plan, there is no reason why this should happen.
Creating a debt management plan generally contains three simple steps. These steps are usually completed with the assistance of a credit counselor.
In the first your credit counselor will compile or make a list of creditors and total amount which is due towards your loans and credit cards. This very first and most essential step that will help you to assess exactly the amount you are obligated to pay. When money is owed to several different creditors with variable interest rates on each amount, the final figure can be difficult to figure out. However, in order to create a cohesive strategy for eradicating your debts it is vital that you understand the total sum you are expected to repay
Keep in mind that some debts cannot be included in debt management programs. Secured debt, such as home and car loans, are not considered eligible as there are tangible assets involved. These debts must be factored into the second step of debt management plan creation.
In the next step counselor wants to find out your monthly income and the minimal amount required for sustainability. This includes house rent, food budget, car payments, and other living costs.
This second step is just as important as the first. It is very necessary to be completely honest about what how much earn and what do require to you spend or to maintain your social status. If we try to cut corners then it will only make debt management process more difficult hence to generate a feasible repayment plan will be again much more difficult . Before you can begin negotiating with your creditors, you must know exactly what you owe, what you earn, and how much you are obligated to spend each month.
Once you have a clear picture of your current financial situation or financial position , it is time to start working aggressively with your creditors to find an arrangement that works for both parties. Do not be afraid to contact your creditors and admit that you are having financial difficulties. In general, creditors would prefer to receive smaller payment amounts for a longer period of time than be forced to sue debtors for larger sums they are in no position to pay. Creditors may agree to settle the debt for a lower sum than is currently owed or freeze interest rates to keep the debt from growing at pace. While such agreements will impact your credit score in the present, consistently making payments on your debt is a sure-shot formula to raise your credit score in the long run.
Once when the final debt management plan is ready by using the informations collectively from the above mentioned or used three steps, we will come to know exactly how much of your income will be going towards repayment, as well as the amount of money you are obligated or required to spend on living costs each month. You will also have the satisfaction of knowing that you are in control of your finances and have nothing to fear from creditors or debt collection agencies.