Stop Paying 15% Charges on Debt Management Plans
A Debt Solution to End Financial Difficulties & Creditor Harassment
Mar 5, 2009
Consumers struggling with financial difficulties regularly turn to debt solutions, such as a debt management plan or Debt Relief Order, to prevent creditor harassment. All personal debts must be unsecured. Examples of unsecured debts include: personal loans, bank overdrafts and credit card debt.
There are other debt solutions, such as personal bankruptcy and Individual Voluntary Arrangements , but these aren't suitable for modest personal debts. Individual Voluntary Arrangements are expensive because they need an Insolvency Practitioner. Personal bankruptcy has never been suitable for small personal debts, especially now Debt Relief Orders are available.
What is a Debt Management Plan?
A debt management plan is a completely voluntary agreement between a debtor and his creditors. It allows someone to put all personal debts under one roof. A single contribution is made to an intermediary who will send money to creditors on a pro rata basis. Many consumers enter debt management plans to prevent further creditor harassment.
Why is a Debt Management Plan Run by Payplan Better for Consumers?
Whilst private companies charge 15% of cumulative contributions to cover administrative charges, Payplan offers debt management plans completely free of charge. Payplan are a registered debt charity, funded directly by the credit industry. The strong links forged with them means that they have a vastly better chance of stopping further interest and charges on outstanding personal debts.
A debt management plan controlled by Payplan allows someone to become debt-free many months earlier than would be possible if it were privately run. For example, a consumer with £10,000 of personal debt paying £100 into a Payplan debt management plan would be debt-free 21 months sooner and save £1,762.50 in fees.
What is a Debt Relief Order?
A Debt Relief Order (DRO) is a new government debt solution designed to write-off up to £15,000 of personal debt. A DRO is a more affordable version of personal bankruptcy and costs only £100 to set up. Full assistance is provided by an intermediary, a qualified debt counsellor.
Debt Relief Orders are suitable for low income families with a disposable income of less than £50 per month and assets of less than £300. They are only designed for tenants, not home owners. Should a DRO be deemed the right debt solution, it is possible for someone to become debt-free in just 12 months.
Those with personal debts under £15,000 should seriously consider pursuing a debt solution, such as a debt management plan or Debt Relief Order (DRO). A home owner with more modest debts cannot proceed with a Debt Relief Order. Should a home owner have personal debts over £15,000, an Individual Voluntary Agreement may be a more suitable option.
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