Making A Debt Management Plan

It's a good idea for anyone struggling to meet their monthly payments on loans and credit cards to consider a debt management plan.

Debt is a big worry for a lot of people in these financial times, but many are unaware that they can discuss making their repayments more affordable rather than sink further in to difficulties.

The plan is an agreement between a bank, building society or finance house and someone who owes them money to pay a set amount every month to clear the debt.

Not everyone who owes money can set up a plan. Borrowers have to meet some conditions:

Only unsecured debts can go in to a plan – that's borrowings like credit cards, store cards and car loans.

They must have some disposable income left after paying all their living costs to contribute to the plan

Managing debts this way is not limited to just one loan or card, the plan can group all someone's personal debt in to one monthly payment.

The advantage for the borrower is that instead of robbing Peter to pay Paul every month, the new payment is based on how much they can afford.

 

Debt Management Plan

 

Setting up a debt management plan

 

Borrowers must remember the plan does not wipe out any money owed, but is a commitment to keep on paying until the debt is cleared.

Debt managers will run the plan. Some charge a fee, others run a free service.

Their job is:

  • To fairly assess the how much money someone can afford to pay their lenders
  • To discuss the new payment terms with the lenders
  • To collect the payment every month and to pay the money on to the lenders

Lenders do not have to agree to taking part in the debt managment plan and do not lose any legal rights. Most will stop writing and calling over payments, but they may continue to do so if they want, and they can still take borrowers to court to recover any money owed.

The idea behind a debt management plan is for borrowers to reschedule their debts over a reasonable period rather than to fall in to arrears.

 

Client Testimonials
  • We were put in touch with Pathfinder by a friend of ours when a failed business created alot of personal debt of which we had no way of being able to continue with the payments . It seemed like a jungle with no way out . Dawn Speakman of Pathfinder...
  • After drowning in debt and not knowing which way to turn I was put in touch with Pathfinder DM, through their help and guidance I am now slowly getting this under control and myself back on track, the staff at Pathfinder have been professional...
  • In early 2009, I read an article in the Salford Advertiser, for Pathfinder, a debt management company. At the time I had run up debts of 50K on various credit cards, mainly through changing jobs, along with a reduction in salary.I arranged a meeting...