Paying off debt can be a real struggle when you have so many other financial commitments, but if you're facing mounting debts and have people chasing you for payments, it may be time to explore a debt solution like a Debt Management Plan (DMP). In this guide we'll look closely at the Debt Management Plan, including what it is, how it works, what debts can be included, and whether a Debt Management Plan might be the right choice for you.
A Debt Management Plan (DMP) is an informal, agreement that consolidates unsecured debts and allows you to make monthly payments to a credit counselling agency to repay your creditors.
Arranged and managed by a licensed credit counselling agency, a DMP is a flexible plan which allows you to increase or decrease repayments dependent on your circumstances.
There is no one size fits all approach to debt management, with circumstances often changing throughout the duration of repayment – the DMP is designed with that in mind offering flexibility to ensure all debts are paid in full.
A DMP helps offer a sense of control when seeking debt help as experienced credit counsellors take control of contact with creditors, removing the daily stresses and anxieties that can come when managing debt.
A DMP is available to those with five or less unsecured debts. The process begins with the credit counselling agency reviewing your level of debt against your income and monthly expenses to develop a realistic repayment plan that meets your affordability.
The agency will approach all creditors to make them aware of the DMP and in many instances some creditors will agree to waive the majority of or all the interest on any debt.
What’s more, repaying in monthly installments over the course of up to five years makes budgeting easier and offers peace of mind when handling your finances.
Payments will be taken until your debt has been paid in full – there is no debt forgiveness.
Dealing with debt can understandably seem like an overwhelming task, however, the debt management plan offers a simplified payment plan to help take the pressure off repaying creditors.
This plan offers the opportunity to increase or decrease payments to creditors in relation to your current circumstances.
Although they are not obligated to creditors may reduce your payments and stop interest charges.
Affordability: You make one affordable monthly payment to the agency which distributes to creditors over a period of up to five years.
A DMP is an informal arrangement and not legally binding.
The plan doesn’t need to include all creditors. Being open and honest with your credit councilor will allow them to advise which creditors can be omitted from a DMP.
Being faced with managing payments to several creditors can be a daunting and fraught task at times.
To help ease the pressure, an experienced credit councilor will manage your DMP throughout its duration by liaising with creditors on your behalf.
A DMP works best for those who meet the following criteria:
Any unsecured debt can be included in a DMP. An unsecured debt is a loan that is not backed by an asset. Examples of unsecured debts include:
A DMP has a wealth of benefits and could be your best option if:
Dealing your finances can be stressful, especially if you owe money to creditors and have no idea how you are going to pay it back. That’s where A. Fisher and Associates comes in.
Our mission is to help people deal with their debt, and we have put together a team of debt specialist with years of experience in money management.
If you’re researching debt solutions, or even just want some advice on how to improve your financial situation, you can talk to a friendly advisor for free today on 416-842-0040.