A Debt Management Program Improves Affordability

Under a debt management program, you'll no longer pay the amount specified in your credit agreement. After an assessment of your financial position, you'll make an affordable monthly payment towards your unsecured debt.

The repayments will continue for about five years or until the debt is cleared. It isn't suitable for eliminating secured debt, such as a home mortgage or auto loan. However, it can be used to clear any deficiency after the creditor has recovered its collateral.

Objectives of a Debt Management Plan:

- Freeze or reduce further interest payments on debt.
- Prevent further late payments and over-limit fees.
- Reduce monthly payments to an affordable level.
- Prevent debt collection activity.
- Simplify family finances with a single, affordable monthly payment.

Help can be provided, regardless of your credit history. The majority of those who apply have already missed or made late payments on unsecured debt. If this is the case, your FICO score is unlikely to deteriorate any further. Your application is also more likely to be accepted because collection agencies are keen to find a way to recover some of their money.

Although a recognized debt solution, it's a purely voluntary agreement and can be cancelled by either party at any time. This could be beneficial to you if your personal circumstances change. You will not get the same court protection that you would from filing for bankruptcy under chapter 7 or 13.

Before contacting a debt management company, gather as much information about your unsecured debts as you can. This includes creditor names, account numbers, unpaid balances, rates of interest, minimum monthly payments, creditor addresses and telephone numbers. The provision of this information will help to prevent any further delay.

Find out whether a debt management program is the right for you.