A Debt Management Plan Could Solve Your Financial Problems

27 June 2012 17:00 - Phoebe Robinson

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A Debt Management Plan Could Solve Your Financial Problems

Have you got yourself into situation where you are stuck over how to handle your debts? Well if so then the solution could well be a Debt management plan (DMP). DMPís are provided by debt management companies whose job it is to negotiate with your creditors to change the terms of your debt repayments. A DMP can be a great solution to dealing with debt, especially if it is likely to be a short term problem.

An advantage of debt management is that it is an informal arrangement therefore avoids the need for insolvency procedures such as bankruptcy. Also by coming to an agreement with your creditors through a DMP you can avoid actions being taken against you such as County Court Judgments.

However you must be aware that due to the fact DMPs are informal your creditors have the right to change their mind at any time. Also a DMP will not help your credit rating it will just help you organise your finances better. Another thing to be aware of is that is that although your monthly payments will be reduced to make them affordable it normally means you will pay more over a much longer period of time.  These plans are better if you have a short term debt problem as otherwise you could end up in debt for a very long time and if the worst comes to the worst then you may find you have no real prospect of getting out of debt and becoming debt free. So watch out!  

 

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