Creating a debt plan: What you need to know
Written by Chelsea Potter on 21 June 2016
You can’t wish your way out of debt, and if it’s getting out of control, you need a plan on how to deal with it. That may mean a personal plan, where you sit down and work out how much you can afford to repay each month, before negotiating directly with your lenders.
Alternatively, you might decide to go through a professional company like us and negotiate a solution such as a Debt Management Plan (DMP) or an alternative route out of debt. What matters is that you don’t have to face contacting your creditors without qualified support.
Here’s our quick guide to both, but don’t forget that you can phone our qualified, experienced advisers for free debt advice at any time.
Repayment Arrangement with your creditors (was DIY Debt Plan)
So, you can see that you’re struggling to get your debt under control, and perhaps you’re falling further into debt every month. If that’s the case, and you feel able to get control of it yourself, it’s time to sit down and draw up a realistic route out of debt.
The first thing to do is draw up a budget – a realistic plan for your monthly spending that includes the cost of essential bills such as rent or mortgage, energy, food and commuting. We’ve written about the best way to do this here.
A budget will give you a much clearer idea of how much you have coming in and going out, meaning you’ll be able to talk to your creditors realistically about how much you can afford to give them each month. If you can’t meet your monthly debt repayments, you can get in touch with your creditors and tell them frankly how much you can afford.
They will want to know that you’re doing your best to repay them, and if you explain your circumstances they might accept your lower payment offer.
Your lenders do not have to agree to give you more time to pay, but they are more likely to do so if you can show them a clear budget and a clear plan. It’s rarely in their interests to push you into bankruptcy, but the more information you have about what you can afford, and how long you’ll need to clear your debts, the more likely you are to find a sympathetic ear.
Help with debt
If you’re struggling to deal with your creditors on your own, or you’re frightened that the bailiffs could be at the door; don’t bury your head in the sand. We can advise you on the best way for you to beat your debts, and get on with enjoying life, without money worries hanging over you.
We know that one of the worst aspects of being in debt is facing the demands, and sometimes even threats, from lenders.
One option is a Debt Management Plan or DMP, where we will deal with your creditors for you. Once you’ve worked out what you can afford to commit to your repayments each month (don’t worry, we can talk you through that if you need us to), we will approach your lenders with a proposal, and encourage them to agree to a monthly payment based on what you can afford.
We will also request that your creditors freeze interest charges while you make your repayments. There are no guarantees of course but we have experience in making the case that our clients should be given time to pay.
We can also talk to you about your other options and find a path out of debt that suits your situation. There are a number of solutions and they all have different pros and cons. Once we’re in your corner, we can help you work out what’s best.
That might be a DMP, but we can also advise you on a wide range of other solutions including IVAs, settlements, debt relief orders and more.
Talk to us
Battling debt can be quite intimidating, especially if you don’t know whether your lenders will allow you to negotiate, or whether you can successfully make your own case.
Here at PayPlan, we offer free debt advice from qualified, compassionate advisers. If you decide to work with us to get control of your debts then there are no hidden fees, and you’ll know you have someone experienced and capable in your corner.
Call us today on 0800 280 2816 and get the advice you need.
Filed under Money Management