Online Savings Account

Higher interest rates than traditional savings accounts.

Member FDIC

Monday, November 09, 2009

What is a Debt Management Plan

The economic downturn has led to debt taking centre stage in the media and news coverage. But debt certainly is nothing new. Consumers often depend on their credit cards, purchase household items with a credit line and take out loans and mortgages. So debt is, for many, simply a part of life.

Traditionally, when debt becomes too difficult to manage, individuals find themselves bankrupt. And while most of us know what bankruptcy is, far fewer of us are fully aware of other alternatives, such as debt management plans.

A debt management plan is, effectively, an informal agreement made between the debtor and the creditors. More of than not, this is negotiated with the assistance of a Debt Management company. The way it works is for the company to establish what you can realistically afford to pay off your debts each month. You must have some form of income and be able to pay at least something. They will take into account your income and living expenses to work out what you can afford to pay off your debts each month and then approach your creditors. Often, the debt management company will attempt to negotiate your outstanding balances down one way or another or to freeze interest. However, because the approach is informal in nature, the creditors are in no way obliged to accept any offer. If your creditors do agree to the offer, you will simply make one monthly payment to your debt management company. They will then divide this accordingly between your creditors for the duration of the debt management plan. This is often five years, at the end of which time your debts are considered to be settled.

Because of this effective timeline of being out of debt, the debt management plan is proving particularly popular. However, if you debts exceed £15000, you’re unlikely to be eligible and may instead have to look into the more formal, legal alternative of the IVA.
Your Ad Here


Post a Comment

Have a comment? Why don't share it to me?


Exchange Links

The Finance Tips

Good To Be True

Recent Posts

Recent Comments

Banner Links

Finance Tips Copyright © 2009 - 2010 Black Nero is Designed by Ipietoon Sponsored by Online Business Journal

Powered by eRDent Dental Forum