DEBT MANAGEMENT PLAN (DMP): ALL YOU NEED TO KNOW

A debt management plan is a carefully structured payment schedule that consolidates all your unsecured debts payments into single affordable monthly payment. These plans consolidates debts, reduces interest rates and fixes an affordable monthly pay which will help you pay off your  debts in 3-5 years.

           

12-10-2020 by Evelyn john

If you feel like your debt is an infinite loop that never ends and you are just tired of it, then it’s time to consider alternatives to escape that loop. A debt management plan can help you pay off the debts strategically and effectively, saving you from the struggle with debt.

WHAT IS A DEBT MANAGEMENT PLAN?

A debt management plan is a carefully structured payment schedule that consolidates all your unsecured debts payments into single affordable monthly payment. DMP’s are offered by nonprofit debt management agencies, who works with your creditors on your behalf. These plans consolidates debts, reduces interest rates and fixes an affordable monthly pay which will help you pay off your  debts in 3-5 years.

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WHEN SHOULD YOU CONSIDER A DMP?

You can consider DMP as your ultimate saviour from debt if;

  • You are struggling from keeping up with different debts with different interest rates and deadlines.
  • You have enough income or budget to meet the monthly payment proposed by the debt management plan
  • You are ready to commit to a 3-5 year structured repayment plan

 

WHAT TYPE OF DEBTS ARE INCLUDED?

A debt management plan is used for paying off ones debts which are not backed up by collaterals, usually and largely credit card debts, other debts that can be included in DMP are;

  • Unsecured personal loans
  • Medical bills
  • Debt in collection

Debt management plans does not cover secured loans.

HOW IT WORKS? THE PROCEDURE

  • Evaluating debts:

 Carefully evaluate and list all your unsecured debts that you would like to include in the DMP. List out every debt you owe, interest rates and the amount due, and think whether DMP will be your best option

  • Credit counselling.

gGo through a credit counselling section with the adviser in the debt management agency to discuss and determine what is your best option to get out of your debts. You will have to provide about your debts, income and your budget for verification process and to propose the best solution.

  • Proposing the best debt relief solution

After carefully examining your debt and present financial situation, and considering all the possible solutions for your debt problems, your debt management counsellor will provide you the perfect plan to manage your debt affordably. And if your condition is not suitable for a DMP, he will divert you to other suitable debt relief options like loan or bankruptcy.

  • Consolidating payments

When you enrol in the plan, all your different debts are consolidated into one, and you will be left with a single affordable monthly lump sum that you should pay  to the agency rather than different sums to different creditors.

  • Contacting the creditor

After you decide on the plan and gets enrolled, the agency takes over your position and contacts your creditor to request participation in the plan. they bargains with the creditor and settles on less interest rates and avoiding late fees.

  • Debt is paid off by the agency

You will be saved from the troublesome payment of different debts at different times and settles on one monthly payment towards the debt management agency. The agency pays off your creditors systematically with this amount, on your behalf, as you are left with a stress free single payment. You will receive statements from creditors regarding repayments. if you can pay your monthly payment to creditor consistently, you can be free from debt within 3-5 years.

ADVANTAGES OF DMP

There are a lot of advantages by enrolling in a debt management plan, they are.

  • Affordability: After a detailed credit counselling, you can decide on a payment plan that is suitable to your financial situation and is affordable. Creditors reduces your interest rates and you will be saved from late fees, reducing the money you have to spend in eliminating debt.
  • Simple method: You can pay off your confusing debts once and for all though single monthly payment. This makes the process easy and simple relieving you from the stress and burden of debt.
  • Fast relief from debt: The systematic payment plan helps you to eliminate the debt with in a time span of 3-5 years.
  • Boost your credit score: You may see a slight dip on your credit score at first, but enrolling in a debt management plan can definitely improve your credit scores in the long run.

Debt management plan may seem so good to be true, but it is not for everyone. The plan and payments may change from person to person and everyone may be not suitable for a DMP. So, take a closer look at your situation and think whether it may be the best option for you. If you are not sure, consult the agency and avail debt counselling on how to get rid of your debt effectively.

We think solution is the best debt management company in Dubai, and we can help you decide what is right for you. Avail our debt counselling services to know your best options and enrol in our debt management plan to get rid of debt easily and effectively.

We think solution is the #1debt management company in Dubai. We offer debt management services like debt consolidation and debt management plans. From effective debt advice to helping you with our responsible short term debt relief loans, we are the answer for everyone in need.

For more details, visit www.wethinksolution.com