Debt Management Plans
A Debt Management Plan, is a voluntary repayment plan proposal that is made to your creditors when you are unable to meet the terms of your initial credit agreement. A Debt Management Plan is sometimes referred to as a DMP.
Let’s look at an example of why you might use a Debt Management Plan to deal with your debts:
Dave has a £400 payday loan with PaydayUK, a £400 payday loan with Peachy and a £800 short term loan with Mr Lender. Although Dave committed himself to quite a lot of debt, it was still well within his budget and affordability to repay the loans on time.
However, tragedy strikes. Dave loses his job and therefore his income stops. He is now in a real pickle because he is unable to repay his three payday loans on time (in accordance with the terms of his credit agreements).
Dave knows he is unlikely to get a new job immediately and it will take even longer to find a job that pays as well has his last one. So Dave needs to figure out how to deal with his payday loans which need to be repaid in a matter of days. Dave is still is able to earn some money by doing part time jobs here and there. This gives him enough money to pay his priority debts like, rent and electricity and he has a small amount of money left over to pay towards his payday loans.
Dave needs to act quickly, so he uses a specialist Debt Help organisation like “Flexible Debt Solutions” to set up a Debt Management Plan which is done completely online. He decides how much he is comfortable paying towards his payday loans which at the moment is only £130 per month. “Flexible Debt Solutions” then produce a Debt Management Plan which they send to Dave’s creditors on his behalf. His creditors review his Debt Management Plan and they decide to accept his proposal. Dave’s original credit agreements required him to pay at total of £800 per month, but now he only has to pay £130 per month. All Dave needs to do now is to pay £130 per month to “Flexible Debt Solutions” and they then pay Dave’s creditors on his behalf. They also deal with all the admin and communication on Dave’s behalf.
So there you have an example of how a Debt Management Plan is used to deal with payday loan problems.
Debt Help organisations like “Flexible Debt Solutions” will often try to negotiate a discount on your total balance from your creditors. They may also request that interest and service fees be frozen. Ultimately it is the creditor’s decision whether or not they reduce your balance and freeze interest and fees. However creditors tend to deal with you favorably because they can see that you are taking positive steps to repay your loans despite your financial difficulty.
We like “Flexible Debt Solutions” because they have an excellent track record and their debt management plans are free. You can setup a debt management plan with them at any time. To set up a debt management plan now click here.