Are you facing unmanageable debts and struggling each month to pay your lenders? Many people continue with the burden of debt at levels that have become too difficult to manage. The fact is that you do not have to. One option to solve your unmanageable unsecured debt is applying for a debt management plan.
What is a debt management plan?
A debt management plan (DMP) is a debt relief method used for paying personal unsecured debts. A DMP will require debtors to deposit monthly funds with an agency (usually a Credit Counselling Agency) that will then disburse them to creditors. If you take a DMP, you’ll have to pay as much as you can afford each month.
DMPs typically last 36 to 60 months and benefit consumers by reducing collection calls and waiving finance charges. Lenders will often agree to reduce – and in some cases pause – interest and other charges on the debts. A DMP will help you repay more of the money you owe within a shorter period of time.
Is a debt management plan for me?
Debt management plans are best suited for people who can’t afford paying their debt repayments at their current level. A debt management plan reduces your monthly debt repayments but you will still be required to make repayments. If you can’t make realistic contributions every month or repay everything you owe within a reasonable period of time, this solution is not ideal for you.
What should I know before I choose a debt management plan?
If you fail to make the repayments you originally agreed on, your credit score will be affected. Also, unless your lenders do agree to freeze interest, the longer repayment period could cost you more overall.
If a debt management plan is not suitable for your circumstances, we have here, at lifeafterdebt.com.au, other debt management options that will release the daily pressure and give you the certainty of manageable financial commitments for the future. Get debt help, contact us today on 1300 237 669.