Your Layman's Guidelines to a Debt Management Plan

The trouble with high finance is it covers its secrets in hazy and confusing expressions, often making basic things unnecessarily intricate. This is an effort to keep all things about a Debt Management Plan, brief, sweet and simple. You might not like all aspects of Debt Management Plans but seeing that in the UK and Ireland it?s the course of action that is probably preferred by ordinary people who are finding it difficult to pay their liabilities as they fall due, it is worthwhile becoming familiar with its ins and outs.

Debt Management is a straightforward method for decreasing and paying off all your overdue private loans and it doesn?t involve trying to get any more credit other than what you have already. You can organize a Debt Management Plan by yourself or else you can utilize the assistance of a Debt Management Company to guide you. If you do it by yourself, you will be contacting and dealing with every one of your lenders and you?ll be requesting them to settle for smaller repayments on each of your debts rather than what you had formerly arranged with them. You will be asking them to discontinue any existing charges for missed payments as well as freeze interest on your accounts. You will endeavour to deal with all your lenders fairly and in the same manner in your talks with them. Alternatively, you can employ a Debt Management Company to undertake these discussions for you.

The nice thing about Debt Management is that it is an simple and accommodating arrangement which is created to satisfy your circumstances and requirements and the installments you make are tailor made according to what you can realistically afford to pay. What you pay each and every month, ordinarily by standing order, hinges on your income, your expenses and your own situation and is calculated to suit your special requirements as well as those of your spouse and children and dependents. While you needn?t be have a job to enter into a Debt Management Plan, you do need to have a source of earnings that is greater than the amount you require for your personal cost of living. In a Debt Management Plan you do not have to release equity from your house, if you do not want to do so, of course. At some point, you will settle all your obligations. Besides that, banks and any other lenders you may have generally favor a Debt Management Plan to any of the other more formal systems for fixing the financial problems of their individual customers. Moreover, the facts of your Debt Management Plan won?t be placed onto the Insolvency Register as happens should you become bankrupt or enter into an Individual Voluntary Arrangement. Indeed, if you are very discreet, you can hide the fact that you are in a Debt Management Plan from your employer, your neighbours and your friends and though it is likely to be challenging for you, you may even be able to keep family members such as your spouse, partner or children from finding out about it.

Needless to say, there are drawbacks as well to a Debt Management Plan, the biggest of which is in all probability the length of time it could take you to complete your Debt Management Plan. It might take ten years to do so however at the end of the day, all your debts will be cleared. The next most severe problem with finding yourself in a Debt Management Plan is that it will damage your credit rating, even though it might already be impacted when you already have arrears or a track record of skipped payments or late payments on any of your accounts. Once you or your Debt Management Company works out a deal and agrees decreased regular monthly repayments with your creditors, this in essence means that you will no longer be making the payments you initially agreed. It is highly probable that a report of this hard truth will be made on your private credit file and these reports are keptby the credit reference agencies which hold on to such files for six years.

You should be aware that a Debt Management Plan does not cover all of your debts. There are certain debts which must be repaid in full as and when they fall due. These are your secured debts such as your mortgage, if you have one or your car HP if it applies to you. These ?must pay? debts are sometimes called priority debts. Certain other debts such as rent and council tax must also be treated as priority debts. Definitely covered by your Debt Management Plan are all of your unsecured debts such as your personal loans, your credit cards and store cards any bank overdrafts you may have. These are the debts where you, or your Debt Management Company, hope to negotiate reduced payments, elimination of charges and freezing of interest with your creditors. There is no guarantee that all of your creditors will agree to accept reduced payments or freeze interest and charges and there is no guarantee that any existing or threatened proceeding will be suspended or withdrawn. Indeed, any debt collection costs incurred by your creditors will normally be added to your debt. Nevertheless, the reputable Debt Management Company will have an excellent track record in negotiating with creditors in regard to all of these matters, in getting your offer of repayment accepted, and in keeping you informed of progress.

If you opt to put in place and manage your Debt Management Plan yourself, you can hold costs to a minimum but don?t underestimate the costs of negotiation and correspondence by phone and by mail or indeed of your own time. The fees of Debt Management Companies vary from one to another. Most of them impose a set up fee equivalent to the debtor?s first monthly payment into the Debt Management Plan. As a result creditors receive nothing for the first month. Thereafter, charges are generally a set fraction of the monthly payment made by the debtor. The average monthly fee is 15% with a minimum of about 25 and a maximum of around 100.

A Debt Management Plan won?t accommodate everyone especially if you are insolvent or very likely to become insolvent down the road and before choosing a Debt Management Plan, you should be aware of the many different courses of action available for individuals who may be in financial trouble. The most prevalent other possibilities are Bankruptcy, Individual Voluntary Arrangement, Debt Relief Order, Debt Consolidation, Asset Sale & Debt Settlement and Property Remortgage & Debt Settlement. It may even be that financial aid can be obtained from family or friends on a formal or informal basis.

Looking for reliable help with debt ? Get inside information on how and where to find the best now in our overview of all you need to know about Debt relief.

Source: http://www.eddyarticles.com/finance/your-laymans-guidelines-to-a-debt-management-plan/

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