Debt management plans explained
Debt is something that many people live with without it causing them any problems, but there are a range of circumstances in which your financial situation could become problematic. Redundancy, illness, or injury for example could all result in loss of income and make repayment of debts difficult. If you find yourself struggling to repay your debts, a number of options are available to you. One of the quickest and most popular solutions is a debt management plan (DMP).
Debt management plans (also known as DMPs), are a way of bringing down the amount you have to pay back each month, so that they are at a level that you can cope with when your income and essential expenditure is taken into account. Putting a DMP in place takes very little time, but the benefits can be significant.
People who have fallen ill or lost their jobs often use DMPs as a temporary solution until they get back on their feet. They can also function as a long-term solution, though, for those who don?t expect their financial situation to get any better. However, if you have particularly high debts, or you are having problems repaying a mortgage or other secured debt, a DMP won?t address your problems.
DMPs do offer various benefits for many people. These include: Bringing your monthly repayments down to an affordable figure; initiating or concluding the plan whenever you want; leaving the equity in your home untouched; not having your name on the insolvency register or having any other public listing that records the fact that you have a DMP.
However, when considering a DMP, you should also be aware that the term over which you have to repay your debts will increase, and because interest continues to be charged, the overall figure you pay back will be higher. Additionally, a DMP won?t necessarily stop lenders taking legal action against you, and your credit rating will suffer.
If you need an immediate solution to your debt problems, a DMP may be the answer. Other debt management solutions do exist though, so it?s always worth discussing your circumstances with an expert.
Find out more about debt management plans.
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Source: http://financehelpnews.com/business-finance/debt-management-plans-explained
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