A debt management plan is an informal debt solution which allows people who are unable to cope with their monthly repayments have it rearranged.
The first step in dealing with a debt problem should be to consider re-arranging the monthly payment which is a debt management plan.
If a debt can be cleared within 4-5 years or someone needs a short term holding solution due to unemployment or other factors a DMP could help.
Debt Management Plan: How To Enter
The debt management plan will always run the same but how someone enters it can change and could be the difference between paying fees or not.
This means people can negotiate with creditors on their own and set up a debt management plan without requiring an organisation to help.
By calling creditors and offering an affordable monthly contribution to repay the debt a debtor can take control of their finances once again.
It’s important to request any interest and charges are frozen before the plan is set up because if not the arrangement will last longer.
Debt Management Organisation
Often people in debt fear speaking to their creditors and choose to hire a debt management organisation to do it for them, but there’s two types.
For-Profit: Debt Management Plan
Some organisations will offer to run a debt management plan for a monthly fee which is taken from the contribution made to the debts.
The fees can vary and will mean the plan last longer than if it was set up by the person in debt or by a free debt management organisation.
Free Debt: Management Plan Plan
The most favoured route to enter a debt management plan is by contacting an organisation who don’t take a fee for running the debt solution.
These organisations will run the solution the same as for-profit companies however they won’t take a fee from the monthly contributions.