In this post I take a look at what happens when you are setting up a debt management plan with a Debt Management Company such as StepChange. The process is likely to be similar for other organisations as well.
When you first get help with your debts, all of the different options available to you can be a bit overwhelming. This is worsened by the fact that you are typically already worrying about your debts. Mixing the two together means you have a recipe for worry!
However, once you have decided on a solution for your debt, you should stop worrying. Finally you have a solution in place, in this case a Debt Management Plan and you can start to get things moving to a better place.
Once you decide that a Debt Management Plan is suitable for you, there are a few things that will happen.
- Your chosen Debt Management Company will need to know about your financial situation. You will complete a monthly or weekly budget to see where you stand.
- You will be asked to supply a list of all your creditors, including the account numbers. You will find this information on any letters a creditor has sent to you.
- You will set up a payment method so you can make payments to your debt management company. Usually this is done by Direct Debit.
- You will sign a form authorising your debt management company to act on your behalf.
- All the rest is done by your Debt Management Company so you can relax.
As you can see from above, it’s not too bad. Just a few pieces of information are required and things can start moving.
Once that’s out of the way…
Your Debt Management Company will send offers of repayment to all of your creditors. They will take payment from you shortly after this.
They may also advise you to change your bank account if one of your debts is to the bank you are with.
Most of your creditors will accept your repayment offer. Some might not but they will still be paid anyway. The majority of your creditors will freeze any interest and charges as well, which should mean what you pay starts to reduce your debt.
You should also find that your creditors stop contacting you, because a payment plan is in place. You can now relax knowing that as long as you maintain your payments, you shouldn’t have to worry about creditors contacting you.
Some other bits of information
You may sometimes hear a Debt Management Plan called a DMP. In fact thinking about it, I could have saved typing out Debt Management Plan several times by using that, however it’s too late now as I am near the end of this post.
Finally if you came here looking for some help with your debt then please visit the Debt Help Page. Good luck with sorting out your debts and if you have any questions, please ask.