If you've finally understood that your debts have spiralled out of control and that you need to do something about them, what information do you need if you are applying for a debt management plan?
Quite simply, there are three main parts to apply for a debt management plan.
1) A breakdown of your budget
2) Information about the people you owe money to
3) Covering letters to send
Its not rocket science. Once you realise you need to help yourself then the way forward is relatively uncomplicated. Following these instructions can help you to manage your debts with an aim of getting debt free.
- A breakdown of your budget
You already realise that you can't afford what you are currently paying, so what can you afford each month. Calculating your budget is, again, quite a simple exercise. Include your income, including and state benefits, and then your outgoings. Don't exaggerate and be fair. If you go out every night and spend £100 per week at the pub, then this would be deemed unreasonable by your creditors. You would need to cut this down. Subtract your outgoings from your income and you should (hopefully) come up with a positive figure. Essentially this is the total amount you will be offering to pay to your creditors each month.
- Information about the people you owe money to
Firstly, and most importantly, you cannot include any of the following in your debt management plan: Housing costs - rent or mortgage, HP agreements, Court fines, CSA payment, student loans. If you are having trouble with these, contact your lender directly and immediately. For credit cards, personal (unsecured) loans, payday loans, overdrafts and other debts you will need the name of the lender, the credit agreement number and the debt value. Putting these in a table will make things quite clear.
- Covering letter to send
You will need to send to your creditors a breakdown of your budget and the list of people you owe money to. Attach to these, a covering letter explaining your circumstances and that you are hoping to make a reasonable offer of repayment each month. Suggest a value, in line with the budget and the other debts you have. Obviously the bigger the debt the more of the surplus you should offer. Effectively it will be on a pro rata basis.
Once you have posted these to your creditors, it will be about two weeks before you hear back from them. Some creditors will take longer.
You should then understand whether they have accepted and if they have frozen or reduced interest charges. Please remember than they don't need to do either.
One final thing... GOOD LUCK
Obviously a debt management plan isn't right for everybody and you should seek help from a professional debt adviser to know whether this is the best route for you. Free debt management plans can be obtained from http://www.debt-managementplan.net/free-debt-management-plans/
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