Debt Advice for Debt Settlement Plan

Do you owe money to creditors and feel overwhelmed? There are debt advisors for debt concerns that can help.  They can help you, in the first instance, by drawing up a debt management plan. DMP’s are extremely useful because they demonstrate where your money comes from and where it goes. As you document your incomings and outgoings, it may also serve as a method of ascertaining if you can cut back on non essentials or make any savings.

Debt management plans, however, are also useful documents that are sent to creditors for them to look at your financial situation. Not only does this show your creditors that you are attempting to manage your finances, but also allows them to see how much (if any) money you have left over. Being transparent over your finances with your creditors means they are more likely to accept the monthly repayment offer that you make.

The best debt management companies are ones that employ sensitive advisors. For debt can be a stressful experience for many people. They may have been paying too much interest, payment protection insurance or are simply being hounded by financial institutions. For many people in debt, thus cumulative pressure can lead to feelings of helplessness or depression.

Debt management companies, therefore, often deal with people at a time of crisis. A skilled advisor should be able to explore a person’s financial situation and suggest the right course of action. As stated, a DMP is a useful first step in demonstrating both to others and the individual themselves, that they are starting to take control of their financial situation.

Debt management plans, might also be in the form of binding agreements, whereby the debtor agrees to pay back a certain amount of money over a set amount of time.  When a DMP has been entered into, creditors can freeze any interest as part of the agreement. Using debt management companies, speaking to an advisor and drawing up a DMP therefore, is an strategy to consider, if you feel you are drowning in debt.

For people who owe more than £10,000 however, then other courses of action are normally recommended rather than a debt management plan. Debtors, for example, can enter into an Individual Voluntary Agreement, or opt for bankruptcy. Both of these procedures involve a cash outlay, though. Contact a debt management company to find out more about these and other options.

Whichever approach is most suitable for you, debt advisors are experienced and skilled at handling sensitive and complex situations in addition to advising people who may be upset or confused. If you are going to use a debt management company, check to see if they charge for their services. Some do, some don’t.  Also, look on website forums to see if any are recommended.

Drawing up a Debt Management Plan

The burden of debt is a frightening reality for many people. Even though people owe, on average, £25,000, this sense of ‘all being in it together’ does little to alleviate the sheer long term stress that being in debt can bring. Taking control of your finances, rather than your finances being in control of you, is a great way to meet this stress head on.

Instead of hiding from phone calls or ignoring the post, it is possible to take control and DO SOMETHING ABOUT IT!
The first step is to draw up a debt management plan. Many debt management companies advise this approach or offer this service. There are some debt management companies who, for a fee, offer to deal with your creditors for you; some of them - such as Consumer Credit Counselling Services or Christians Against Poverty - will do this for you for free.

However, it is entirely possible for you to start to deal with your finances yourself, by, for example, contacting your creditors, asking them to freeze any interest and to offer them a reasonable monthly re-payment. It all begins though, with a debt management plan or DMP.

A debt management plan demonstrates to your creditors or debt management companies that you have started to address your finances. A DMP can also form the basis of an interesting experiment for you: To begin with, write down a list of all your monthly income and expenditure. Some of your expenditure will be fixed - such as subscriptions or direct debits to utility companies. 

Certain categories - such as food, drink and entertainment, you may initially have to guess. Next, draw up a weekly plan of how much you spend  - and be sure to include everything: that sneaky glass of wine, the newspaper and cup of coffee whilst you were waiting for a friend, that late lunch.  Not only will you see how your estimated monthly outgoings compares against your actual (4 times) weekly outgoings, you may also notice patterns of spending or frivolities that could be curbed:  ‘If I used a flask and had packed lunches, then I could save X pounds a week...’

Most debt management plans cover the following, so be sure to include these when drawing up your income and expenditure list:
Utilities (water, gas, electric), council tax, rent or mortgage, broadband, mobile phone bill, travel, food and drink, entertainment, tobacco, media, clothes, other credit.

It would be wise for you to also have a ‘sundries’ column, that way you can make a note of how much you spend on ‘luxuries’ as well as keeping an eye on any savings that you could make with regard to food, drink, entertaining, or indeed any of the other categories.

Once you have drawn up your realistic debt management plan, this should then spur you on to approach your creditors to negotiate affordable re-payments - as well as hopefully given you plenty of food for thought in the process!