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How A Debt Management Plan Can Help You

Posted on August 23, 2008 - Filed Under Finance

A debt management plan offers a realistic and affordable way for people
who are in debt to become free of their debt. Obviously because you will be
paying a reduced monthly amount the time it will take to become debt free will
be extended. As part of the initial consultation with a debt management company
they will ask relevant questions about your monthly income and expenditures, to
ensure that you have the means to make the repayments and still have sufficient
money to live a healthy lifestyle. It is therefore imperative that you are as
open and honest with them as possible and can realistically afford to make the agreed
payments. The amount of time over which you have a debt management plan will be
calculated using all the evidence you provide.

It is not unheard of for creditors to make claims that they will refuse
to deal with debt management companies, however, a creditor cannot refuse to
take payments from a debt management company and then try to take you to court
for non-payments of the debt. Some creditors would prefer not to deal with debt
management companies so that they can apply more direct pressure on you to pay
but you have a legal right to chose who you like to deal with your finances.

Other creditors apply pressure on debtors by using threatening tactics
such as saying they will send a bailiff round to collect their money, but
unless a bailiff has been instructed and sent by the Sheriffs office or a
County Court, the creditor has no legal right to send a bailiff to harass the
debtor or indeed go to their house and demand money. A debt collector hired or
working for the creditor may also try and threaten and trick the debtor by
saying that they will ?send the bailiffs round’ but they also have no legal
right to do so.

As all creditors have a right to be treated fairly and equally it is not
possible to keep a credit card for ?emergencies’ due to the fact that if the
other creditors find out that you are treating another company more favorably
than them they may well reject any offers made to them and will most likely
look to collect their money through court action. That is one of the reasons
that many people are advised to cut up their credit cards and store cards until
their debts have been fully repaid.

Once you have defaulted on payments to creditors you are breaking the
terms of the repayments with them and therefore this may have an unfavorable
effect on your credit rating, likewise entering into a debt management plan
will also mean that you are breaking the initial agreement with the lenders and
this will also have an effect on your credit ratings.

A debt management company will not lend money nor will they pay off your
debts, the , they will however ensure
that you have a surplus of money each month above what you need to live on to
ensure that you have the means to make the payments on a regular monthly basis.