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Debt Management Plan for People

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Debt Management Plan for People with Bad Credit

A Debt Management Plan(DMP) will help you manage all of your current debt by working out a monthly payment plan designed specifically to fit with your financial means.

By consolidating your payments into one, affordable monthly payment, you can relieve yourself of the pressures of having to pay back multiple debts at once. Generally, though not always, your creditors will freeze the interest and penalties on your debts so that your reducing your monthly payment doesn’t have significant adverse effects in the long run on the amount you need to pay back.

With a DMP, you can take control of all of your current debt without needing to take out any more credit, as you would with, say, a debt consolidation loan

A Debt Management Plan will enable you to deal with the majority of your present debt by working out a regularly scheduled installment plan structured explicitly to fit with your financial means.

Independent Mortgage Brokers will help you unite your payments into one, andmoderate regularly your scheduled payment, thus helping you relieve yourself of the burden of paying back several debts. For the most part, however not forever, your lenders will solidify the intrigue and punishments on your obligations with the goal that decreasing your regularly scheduled installment doesn’t have noteworthy antagonistic impacts over the long haul on the sum you have to pay back.

With a DMP, you can assume responsibility for the majority of your present obligation without expecting to assume out any greater acknowledgment, as you would with, say, an obligation union advance

Advantages of a DMP

The main benefit of a Debt Management Plan is that it allows you to pay off all of your current debt much more easily and while still managing to maintain a normal standard of living. Generally, the length of time that you are in debt will increase, but the impact the debt has on your daily life will be reduced significantly. As mentioned above, another significant benefit of a Debt Management Plan is that it is one of the few debt solutions which does not require you to take out any more credit of any kind. While taking out another loan can be helpful, as with a Debt Consolidation Loan, many see a Debt Management Plan as a more prudent option, and would rather escape debt altogether than take out one loan to pay off others. While a Debt Management Plan and its conditions are not legally binding upon your creditors, they will still generally stop any interest or penalty charges while you are repaying your debt. This means that extending the amount of time you spend paying back what you owe should not put you at much (if at all) of a disadvantage in terms of the amount you actually pay back.

Disadvantages of a Debt Management plan

Customers join a debt management plan when they can no longer afford their contractual monthly payments to their creditors. Many people who come to us will already have missed payments and adversely affected their credit file. When debt management partners renegotiate payments to a level you can afford it is likely that you will have defaults placed against you which will affect your credit file for six years making it harder to obtain credit even when your debts are cleared.

When a creditor does not receive the contractual payment they may put interest and charges on your debt. In the majority of cases we will negotiate with creditors to freeze any charges. However this cannot be guaranteed and in some cases creditors will continue adding to the debt. One of our trusted debt management partners will always endeavor to stop this when it occurs.

By paying reduced payments to your creditors it will take you longer to repay your debt. We will always strive to give you a clear estimate of the likely timescale of your plan.

If you are looking to pay off multiple debts without drastically changing your lifestyle and would rather not take out an extra loan to do so, then applying for a Debt Management Plan could be right move for you.

To qualify for a Debt Management Plan, you must meet the following criteria:

  1. You need to have a disposable income of at least £80
  2. You must be owing at least two creditors
  3. The debt will be up to at least £2,500
  4. Your disposable income has to be lower than your contractual payment

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Based on our research, the content contained in this article is accurate as of most recent time of writing. Lender criteria and policies change regularly so speak to one of our Independent Mortgage Brokers to confirm the most accurate up to date information. The information on the site is not tailored advice to each individual reader, and as such does not constitute financial advice. All advisers working for or with Independent Mortgage Brokers are fully qualified to provide mortgage advice and authorised and regulated by the Financial Conduct Authority. All our independent Mortgage Brokers will offer advice specific to you and your needs and circumstances. Some types of buy to let mortgages are not regulated by the FCA. Think carefully before securing other debts against your home. As a mortgage is secured against your home, it may be repossessed if you do not keep up with repayments on your mortgage. Equity released from your home will also be secured against it.

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