A debt management plan is the easiest debt solution to enter although it’s an informal arrangement which can be changed by either party.
Anyone can negotiate with their creditors to repay all their debt over an agreed period of time, this is called a debt managment plan.
Types of Debt Management Plans
Debt advisers will tell you there is no such thing as different debt management plans and this is true.
When I say different i simply mean the route by which someone might enter a debt management plan.
The end result is always the same, an agreement to repay the full debt, payments are made and it’s cleared.
Personal: The person in debt can call each creditor and offer to repay the debt over a reasonable period of time. This should be reasonable for both the creditor and debtor.
There’s no point setting up a debt management plan for 10 years or so because it’ll take too long to repay.
Often people fear calling their creditors but if they are offering a repayment plan it’s better to make contact.
Organisation: For people who are unable to contact their creditors some organisation will offer to do it.
Some organisations will charge a monthly fee for managing the debt solution while others will do it free. It’s always better to speak to a free debt management company rather than for profit.
Creditor: Often creditors will offer a repayment plan, however it’s unlikely all creditors will offer one at the same time, and neither will know about other credit commitments.
Alternatives to Debt Management Plan
In Scotland people can enter a debt arrangement scheme which is similar to a debt management plan but will freeze interest and charges.
If a debt management plan is set to last to long it maybe the wrong debt solution and a trust deed or IVA maybe better suited
Enter A Debt Management Plan
Once someone has received debt advice from a reputable and qualified organisation who have advised DMP as the best solution they will have an option.
- Contact a free debt management company
- Contact a for profit debt management company
- Setup a debt management plan themselves