Using a Debt Management Plan to Get Out of Debt

January 11th, 2017 → 8:35 pm @ // No Comments

Using a Debt Management Plan to Get Out of Debt

Your debt is piling up every single day. Yet, you realize you are not in the best position to handle all your repayment efficiently? Consider using a Debt Management Plan (DMP)!

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DMP is a unique plan specially devised for a debtor to pay back his bills to the creditors in a way that is voluntarily agreed by both parties. It is normally arranged through a third party, a debt management company, which also provide professional financial advices and budgeting services to the debtors. If you are thinking that such services would cost a lot, there are also free or low-fee DMP organisations (e.g. charities, government agencies) around!

So what are the pros and cons of using a DMP to repay your debts?

Pros:

  1. A DMP allows you to pay a single amount each month to your DMP company, which will then distribute the money to your creditors. Your repayment rate will be negotiated with you and your creditors to suit your income level. This provides a better control over your finances and prevents you from borrowing money to settle your debt!
  2. It can give you a peace of mind as your creditors will no longer hunt you down through various means
  3. In some cases, creditors will agree to freeze charges and interests, which keeps your debt stable rather than ever increasing.
  4. If you are committed to your DMP, you will get out of debt slowly but surely!

 

Cons / Limitations:

  1. Creditors are not obliged to follow your DMP and can still choose to contact you for immediate repayment;
  2. You can only enter a DMP if you have leftover money every month after deducting all your essential expenditures
  3. Only unsecured debts (e.g. credit cards, overdrafts) are covered by DMP, whereas secured debts (e.g. mortgages, utilities) are not

 

While choosing your management plan provider, do make sure they have discussed all the possible options available to you and you must be well aware of how much you need to pay for how long. Commit to your plan and that will bring you out of your bills!

Please read the fastest way to fix your debt by clicking here!

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