You are not alone there are many individuals who have trouble keeping up with the debt they owe. Get help now before your situation gets totally out of control. There are debt counselors who can give you the help you need. The longer you wait the fewer options you will have.
A Debt Management Plan is a way to pay your Creditors in monthly installments through a Credit Consolidation Company. You make a monthly payment to the company who then divides the payment among your Creditors.
Before choosing a Debt Consolidation Company, check them out and make sure that they can be trusted. Once you have agreed upon a payment plan.
Check List for choosing the right company:
It can stop Collectors from calling and harassing you. It helps to have all your debts combined into one monthly payment reducing the risk of late payment fees.
Setting up a monthly plan must consider your other monthly expenses, such as rent, utilities etc. Keep up with your payments and make sure that you are paying on time. It could take three to four years to pay of your Creditors through a DMP. Your credit score may be reestablished once all your debts have been paid off.
Remember, you can use a DMP for unsecured debts only such as Personal Loans, Credit Cards, School Loans, and Store Credit Cards.
Before choosing a Debt Consolidation Company find out if you can close any eventual contract whenever necessary. It is also very important that you understand interest rates involved and penalties for late payments.
Check out the company before choosing by asking your local Citizens Advice Bureau.
There are other options you could choose if a DMP does not work out for you:
Bankruptcy – use it only as a last resort. You declare bankruptcy when you cannot pay any longer your debt. At the end your debt will be cleared out.
Beware that you could lose all of your possessions including the home you own. Your bank accounts will be frozen you won’t get any loans or Credit for a long time.
Family Arrangement – is when you contact your Creditors and make informal arrangements to repay the debt.
The Creditor can back out of the agreement at any time.
IVA or Individual Voluntary Arrangement – is similar to a family arrangement but this arrangement is legally binding.
You make monthly payments over a number of years. With this plan you do not lose any of your possessions. Make sure you understand the costs involved with this solution.
Debt Relief Order – if your income is limited and you cannot pay your debts at this time, you may be able to get a DRO and have your payments deferred for up to 12 months.
Administration Order – you have to have a job and owe less than 5,000 and be able to make monthly payments.
There are many organizations out there to help you with your money difficulties. National Debt Helpline, Consumer Credit Counseling and the Credit Advice Bureau will offer free support on how to get your debt cleared and your credit restored.
Remember when finding an organization to help you with a your debt ask questions, make sure you understand all the consequences involved. You want to be using an qualified organization that is going to make your payments on time. If the company is not making your payments on time, your credit is only going to get worse. Change companies and find one you can trust.
Applying for a DMP usually require a debt above £1500 to two or more Creditors.
