How to get a debt management plan for free
Published Mon, May 23, 2011 Updated Tue, Feb 16, 2021
Being in debt can be full of competing priorities – who to pay and when, how much you can afford to pay on top of interest or simply to carry on paying the minimum requirement every month. Sometimes it can even be a choice between bills or food or other general living expenses.
For people struggling to meet monthly repayments, who have a bit of money left over each month but simply just not enough, a debt management plan can be of considerable help. It won’t suit everybody’s needs but it is often a popular option provided by debt advisers to help people stop their debts mounting up and spiralling out of control.
What a lot of people don’t know, is that although there are lots of companies out there that offer debt management plans to customers for a fee, there are in fact several charities that can provide the exact same service completely free of charge.
What exactly is a debt management plan (DMP)?
A debt management plan is where a third party (often either a charity such as Step Change or a company) acts on behalf of an individual who is struggling with debt by approaching their creditors in order to negotiate an affordable monthly repayment plan. They will also ask for any charges and interest to be stopped.
Once the third party have agreed a monthly payment plan with the creditors the individual in debt simply pays the third party the agreed amount that they can afford and this then gets divided up between the different creditors.
That way the person in debt knows that there is one affordable fixed amount owed by them each month that will cover all their debts, which can certainly help take some of the pressure off.
Free vs fees
However, any company acting as a third party is providing a service as a middle man and that doesn’t come for free. They are a business and as such are out to make a profit because that’s how businesses work. They add on a fee to the monthly repayments to cover their costs, which mean that the person in debt is paying a slice to them each month that they could be using to pay off their debts.
Thankfully for those in debt, there are debt help charities out there who can provide all kinds of debt help, advice and counselling, completely free of charge. So every penny paid goes to paying off debts and nothing else. Plus, creditors are often more likely to agree to negotiations made by respected and established charities than many small private debt companies.
That’s why if you are in debt, you never need to pay for a debt management plan at all, simply go to a charity and let them help you get back in the black completely free of charge.
Article written by Robert John