Credit Card is a funny thing. Even before you know, you’ve spend more money than you can afford, either for personal use or business demands. So one fine day you are unable to pay your debt and default, which definitely results in creditors calling you for collection. At such circumstances, people often do not know what to do and are stranded with mental tension and see no way out. Here’s a simple plan for you to get out of it all even if you cannot gather money to relieve all your creditors – the Debt Management Plan.
Let’s understand what a debt management plan is –
It is an agreement between you and your creditors to disburse-off all your debts.
How do you do it?
You register under a debt consolidation or management plan with a company licensed by the Office of Fair Trading. Once you have registered under this plan, you are supposed to make regular payments to this company.
How does it work?
The licensed debt management company finalises your monthly payments on the basis of your debt. They will require your financial statements to do so, for instance, things like your income, your assets, debts and details of creditors. The company will then contact all your creditors and seek their agreement on the arrangement. Your monthly payments will be dispensed in a mannered fashion to your creditors.
The general duration of paying-off debt through a debt management plan is 36- 60 months. This, however, also depends on the amount of debt you have conceived.
Benefits to you
By enrolling into the plan, you would be relinquished of heavy finance charges namely interest payments. Moreover, you won’t be bothered with the nerve wrecking collection calls. Once you have completely paid-off the money you owe, the company helps you in reinstating your credit.
If you are deep in debts, then the sensible choice would be to enter into such management plans. The sooner you take this valuable step, more likely would be your chances of regaining a debt free and financially secure life.