Free Debt Management Plan

Using Free Debt Management Plans

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Finding A Free Debt Management Plan

Finding a free debt management plan (DMP) is a bit like finding a needle in a haystack. The problem is that all organisations that provide debt management services have to be paid for the help they provide. Some advertise free debt management plans where in fact they are not really free at all. You may not pay a separate fee to the organisation, but a small part of the monthly payments you make will go to the debt management company to cover their costs.

There is even the odd company that manages to get a certain amount of funding from creditors towards their costs, which reduces or removes the proportion they take from your payments, but they are still being paid for what they do. Even if you get debt advice from a government or publicly funded organisation, they may give you free and honest advice, but when it comes to actually setting up a debt management plan, they will then refer you to a commercial debt management company to actually set it up.

A lot of companies will advertise free debt management or free IVAs, but most of the time all they mean is that there are no up front fees, and that what they charge is included in your payments, so you do not feel the pain of it. This is not a problem or a rip-off, it is just a fact of life because the companies offering these services are ultimately in business and not charities. The important thing is to make sure you get good value.

Free Debt Management Plan – Getting The Best Value

Not finding a truly free debt management plan does not mean you will not get good value or good service. The best way to ensure you get a good value plan is to apply to a few different debt help companies and compare what they offer you before you commit to anything. As you would when looking for any other type of service it is just good sense to compare before you choose.

The most important decision you can make, once you have decided to seek debt management help, is to find reliable and reputable companies to talk to. There are organisations out there that cannot be relied upon to give you honest or unbiased advice, so it is important to be sure about the ones you are applying to, even if you are approaching a few.

You can find a list of some of the most reputable debt management companies on the main debt management page of this website.

Free Debt Management Plan – How Does It Work?

It makes sense to have an understanding of how debt management plans work before you apply for help. This way you have an idea of what to expect, and can better spot anything that sounds slightly suspicious or unusual. Debt management is sometimes also referred to as debt consolidation, but it should not be confused with consolidation loans, where you borrow more money to pay off all your old debts. Debt management does not involve any loans or borrowing, but is about paying back what you owe in a less costly way.

When you approach an organisation about a DMP a debt advisor will go through your details with you in order to get a complete picture of your financial situation. Only then can they give you proper advice on what course of action is best for you. If they recommend a DMP and you agree to it, they will then approach all of your creditors with view to changing the agreements for how you repay the money you owe. This normally means freezing or reducing interest charges and other measures to bring down the cost of your monthly repayments to make sure that your debt stops growing.

When this process is complete, you just make one monthly payment to the debt management company, which should be for a more affordable amount than you were paying out for all of your debts. The company are then responsible for dealing with your creditors and passing on the agreed payments to them. As well as the obvious benefit of being a smaller amount of money, the single payment is also much easier to manage in terms of keeping on top of payments and not forgetting to pay anyone, which makes a huge difference to some people.

What If I Cannot Get A Debt Management Plan?

For a DMP to work, you need to have a certain amount of unsecured debt and a steady enough source of income so that you can afford to make a regular payment into the plan after covering your main household bills. If your situation is so serious that you do not have enough spare income each month, you may need to look at a more radical debt solution. For people in the UK, that would mean an IVA or individual voluntary arrangement, or for US residents it would mean debt settlement.

Free Debt Management Plan – Recommended Providers

As mentioned earlier, the safest approach to getting honest and good value debt help is to apply to a few companies that you know to be reputable and reliable. You can get a free consultation and they will recommend the best course of action, including the offer of a debt management plan if that is appropriate. You are under no obligation to accept any offers made so you can apply to a few companies and see what you think of the people you deal with and the proposals they make.

You can find a list of some of the most reputable providers of good value debt management plans on the main debt management companies page of this site.

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Advice On Finding A Free Debt Management Plan