How A Debt Management Plan Can Help You

by : Tom Heath

A debt management plan offers a realistic and affordable way for peoplewho are in debt to become free of their debt. Obviously because you will bepaying a reduced monthly amount the time it will take to become debt free willbe extended. As part of the initial consultation with a debt management companythey will ask relevant questions about your monthly income and expenditures, toensure that you have the means to make the repayments and still have sufficientmoney to live a healthy lifestyle. It is therefore imperative that you are asopen and honest with them as possible and can realistically afford to make the agreedpayments. The amount of time over which you have a debt management plan will becalculated using all the evidence you provide.

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

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

As all creditors have a right to be treated fairly and equally it is notpossible to keep a credit card for ‘emergencies’ due to the fact that if theother creditors find out that you are treating another company more favorablythan them they may well reject any offers made to them and will most likelylook to collect their money through court action. That is one of the reasonsthat many people are advised to cut up their credit cards and store cards untiltheir debts have been fully repaid.

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

A debt management company will not lend money nor will they pay off yourdebts, the Debt Management Plan is a solution for you to pay off your debts ata monthly rate which you can afford and if you do not make payments into theplan the debt management company will not make payments to your creditors.Since there is no money lent by the debt management company they will not havethe need to credit check you before you are acceptedScience Articles, they will however ensurethat you have a surplus of money each month above what you need to live on toensure that you have the means to make the payments on a regular monthly basis.