Debt Management Questions!

What is Debt Management

Debt management service is offered to those customers who are facing the problem of bad debt. In a debt management program the debt management agencies work to lower the interest rate on the credit card accounts in hopes of lowering the monthly payment and causing more funds to go towards paying off the principal instead of the interest charges. The result of this is faster payoff of enrolled debts, usually within 60 months.

How much I need to pay to my Debt Management Plan?

This is actually depends on your debt situation. You must carry on your monthly payments consistently because your lenders can cancel the agreements, which debt management company had made on your behalf. That is the reason that why debt management firm would plan a reasonable monthly payment, based on your earnings and expenses. Least amount of payment is 125 pounds monthly or 30 pounds weekly.

How much time is required to clear all my debts?

The program will last till you clear all your debts completely. Usually all debts are cleared within 60 months for the most of people. The exact time required depends on your debts and amount of money that you can pay every month to your debt management plan.

How my credit rating will be affected after enrolling with debt management plan?

Yes it will negatively affect you credit rating. It will be written in your credit report that you debts were cleared after doing some debt management. But with the passage of time, your credit rating will be improved when all of your debts will be cleared.

Will I receive any proof showing that my creditors are paid every month?

Yes, usually a monthly statement would be issued, by your debt management firm, which will have the details about the amount of money each lender have received.

Is this a loan?

No, this is not a loan. Similarly, debt management firm is not responsible to pay off the debts. Actually, the payment plan of a client is basically a solution, which gives him an opportunity to repay his lenders at a reasonable monthly rate. If he is unable to give his payments then debt management firm would not be able to make payments to his lenders.

I have no job. Can I apply for debt management program?

Yes. Your application for debt management will be accepted if you have some extra money that can be used to pay your creditors, every month. There are no restrictions like having a job or a business etc.

Will you deal with every credit card company to clear my debts?

No. If you do not have much money then debt management firm will consider only some of the debts on priority basis and your mortgage and utility bills are its simple examples.

Do I need to pay any interest on my monthly fees paid to debt management firm?

No interest is paid as your money is only held for 14 days and after that the money is distributed to the creditors.