But what exactly is a Debt Management Plan?

It is a method used all around the world for helping people pay their personal unsecured debts. It is a traceable plan based on a particular analysis of all your debts by a specialist called debt consolidator. He or she represents you in a negotiation process with your lenders in order to make your overall debt interest rates lower and your monthly payments more realistic. This way you can pay off your debts through monthly deposits to your credit counselling agency, which distributes it to your creditors.

A Debt Management Plan is a vantage-point not only for you, but also for your creditors, so they will surely accept it. That is to say, your lenders won’t have to make calls or take notes about your being late, or wait for you to pay. Although probably they won’t collect the exact amount needed at once, but they still get more than usually due to the debtors’ more realistic monthly repayment. But you as a debtor will benefit as well, as with the new more advantageous payments you won’t be late. You will have to pay less; therefore you won’t have that uncomfortable feeling every month in fear of your next payment. This means less money to pay for debts and less stress in the same time! It sounds great, isn’t it?

You may possibly want to ask what kind of debts you should have to be advantageous for you to enrol in such a program. A Debt Management Plan should typically be used to eliminate unsecured debts such as personal loans, credit card debts, and bank overdrafts. For secured debts or priority costs (like mortgages, rent and utilities) this option is not a good one, as these costs are not eligible for monthly payment reductions.

Let’s move on a little bit to talk about the forms of these managed informal arrangements with creditors. You can use a free Debt Management Plan organisation financed by creditors or you can choose a fee-charging company as well. It is important to mention that any plan proposal put forward by a counsellor on behalf of the debtor should be accepted by the creditors. An effective debt advice service knows this, therefore suggests only a realistically affordable amount per month that takes into consideration the debtor’s priority costs (food, housing, mortgage, utilities etc). In both of the previously mentioned types it is possible that creditors want to have a clear picture of the debtor's situation year by year to be sure they pay as much as they can afford fairly.

Fee-charging Debt Management Plan companies usually charge starting fees representing administration costs, and then a percentage of the surplus paid to the creditor is charged as a fee to the debtor. If the debtor is encouraged to make a larger payment, the fee-charging company receives a larger fee as well. But these companies usually offer enhanced support and more effective services all along the programme. It is common that they also have special "creditor liaison" departments and these negotiate with creditors to stop even interest and other charges that are added to the debts. Nevertheless pay attention and make some initial calculations before enrolling to such a programme! Be sure not to enter into this kind of arrangement when it is not your interest! Consider if a bankruptcy would be a better alternative than a Debt Management Plan, particularly if you have large debts that would take many-many years to pay back. You can be sure of your choice if you talk initially with a counsellor about your financial chances.

Before moving on let’s provide you some useful tips to consider when choosing a Debt Management Plan organisation!  Before all, check if the organisation is licensed, and what kind of services they offer. Also, inform about their offering free information about the nature of their services, and be informed about their fees, and about the opinion of former clients. Last, but not least, it is important to check if they have counsellors trained by an outside organisation. After choosing an organisation, be sure that you get all verbal promises in a formal written agreement. It is also recommended to make sure your creditors are getting paid according to your plan. But if all these previous factors are checked, you’re safe!
Now let’s try to answer why a Debt Management Plan is so unique. Because it takes care of you in a sense that you will have a supportable amount to pay for debts. You might ask how this is possible. Let’s see! What a counsellor makes for you is an extensive assessment of not only your debts, but also of your income and budget. As a result, the counsellor will make suggestions to the creditor on your behalf about the amount that can be afforded realistically in a month. Moreover, if you have completed your payments, they will help you re-establish credit. Isn’t it a strike of genius? You may say: “Yes! This is what I really need!” And you’re very likely right!

So why is a Debt Management Plan so special? Do you know it by heart? Let’s take a close-up look at its benefits!
If you accept the extended services offered by a Debt Management Planning, you will experience the following things. First of all, a debt consolidator will represent you and will negotiate on lowering your interest rates, and your overall monthly payments. They will also try to reduce or eliminate all of your extra fees and finance charges that occurred as a result of late payments. All these benefits make that it takes only 36-60 months to repay debts through a Debt Management Plan. Be it unbelievable or not, but a Debt Management Plan guarantees you to speed up your repayment period. And don’t worry; your accounts with creditors will be arranged 100 per cent of the amount you pay, so there is no late payment any more! As you could see, a Debt Management Plan has dual role: it helps you repay your debts but in the meantime it guarantees creditors receive the money you owe to them.

As a short reminder let’s make reconsideration! If you have several debts, you may be eligible to enrol in a Debt Management Plan. Why is a Debt Management Plan good for you? First, as this is a systematic way to pay off your debts. Then, because it usually reduces interest rates, eliminates fees, and it also lowers your overall monthly payments. As a result, your balance can be lowered more rapidly. Using this service, you can become debt-free within 3 to 5 years. A further (though very important) benefit is that you won’t get any annoying calls that remind you that you’re full with debts.

Isn’t it easy? Take a single step and become debt free! Choose a Debt Management Plan, and receive this way a practical, individualized scheme which helps you still pay off your debts and reduce stress. Let your debt consolidator negotiate on your behalf, making your payments more favourable and realistic. And don’t forget: being debt-free is not a matter of chance, but depends on your choice! Choose to be debt-free!