Here is the step-by-step process in creating a debt management program:
- The first thing that you are going to do is to review your budget.
- You should take into accounts all of your current debts, your essential outgoings like your mortgage, council tax, electricity bills, phone bills, internet, groceries, etc. You should also take into consideration your current income.
- The next step for you to do is to determine how much money you can spare each month for payment through debt management plan or program. This is essential so that you can afford to pay your debts through DMP. This is a very important step to ensure that you have the resources in paying your debts via DMP and also to your essential expenses or outgoings.
- Your debt advisor will contact your creditors. Once you have discussed in detail your financial situation with your debt advisor and you have agreed to the debt management plan created by your advisor, he will then contact your creditors and he will be the one to present a detailed statement of your finances. The advisor will present a monthly payment plan to your creditor based on your finances.
- The next step in the process for your advisor to do is to request the interest and charges to be stopped. Creditors will also be requested by your advisor not to take any further action. If any action is to be done, creditors should talk it out with your debt advisor first just as long as you maintain your payment terms and not miss any payment.
- Next, your debt advisor will negotiate your repayment fee with your creditors and cut your debt payments according to the terms stated in the DMP.
- Your debt advisor will then write a letter addressed to your creditors to confirm the plan and they should agree to it.
- Once everything is confirmed, you pay a monthly fee to your debt advisor or to the debt management company itself. The debt advisor will be the one to “pay” to your creditors until such debt has been fully repaid.
Once this step-by-step process for creating a debt management program has been completed, you can now have peace of mind and go for a fresh financial start. DMPs can be very advantageous and they can really help you get your feet back on solid financial ground.