How does an Debt Management Plan work ?

Firstly, what is a Debt Management Plan?

A Debt Management Plan does exactly what it says on the tin. The Plan is set up by a Debt Adviser to manage the repayment of your debts. It ensures that you only pay out what you can afford each month, thereby reducing the total value of your debts.

It is an informal arrangement that will see you making just one payment each month which Promise Debt Solutions then splits up between your creditors. This ensures your creditors each receives a monthly repayment, no matter how small.

You are not tied to the Plan but it can be a grand way of clearing up what you owe.

How does the Debt Management Plan work?

Promise Debt Solutions will allocate a Debt Advisor to co-ordinate and look after your Plan. In order to get the Plan started, your Advisor will go through your finances, establish exactly what you owe and to whom you owe the money.

There is no need to be embarrassed about your position. But it's absolutely vital that you tell the whole truth and don't try to hide anything! You can always be sure that your Advisor has come across far worse! And sorted it out!

Your Advisor then negotiates with each of your creditors in turn to minimise the amounts they will settle your debt for. This involves freezing or reducing interest and charges and hopefully, writing off some of your debt.

Then your Advisor will work out your personalised repayment schedule. This will plan out all your income, sort out how much you can afford to repay your creditors each month and allocate that money between each creditor, thereby repaying your debts over an appropriate period of time.

How much does it cost?

Normally, it costs you nothing! Not a penny. Not even a fee for getting the Plan approved!

The costs of operating the Plan are usually paid by your creditors. They pay a small commission to Promise Debt Solutions on the money repaid to them. After all, the Plan means that they should eventually get paid the net settlement figure they agree with your Advisor.

 

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Warning.
Think carefully before securing other debts against your home. All loans are subject to status. By taking out a consolidation loan, the repayment period is usually extended to reduce the monthly repayments and that can increase the total cost of the loan.

Your ability to obtain credit will be affected in the short term and might be affected in the medium to long term. Fees are payable.

Debt Managament Plans, Is it right for me?