How quickly does a Debt Management Plan start
If you are struggling with your debts one of questions you may have is how quickly a Debt Management Plan (DMP) can be put in place. The answer is that it can be started very quickly. You can reduce the amount you have to pay straight away meaning you get immediate debt relief. However it is important to understand that after you have started the Plan you will often continue to receive collection demands in the form of letters and even telephone calls from your creditors. This could continue for some time. In addition interest and charges are still likely to be added to your account balances for a number of months.
If I use a Debt Management Plan how quickly can I start paying less towards my debts?
If you start a Debt Management Plan you can start paying less towards the debts you have included straight away. If you think about it this makes perfect sense. The reason you are struggling with your debts is that you do not have enough money to pay them all. In fact the only way you have been maintaining your payments to date is probably by borrowing from one to pay another. This must stop.
You first need to put together your income and expenditure budget and calculate what you can afford to pay towards your debts as a whole each month. You then divide this fairly between all of your creditors on a pro-rata basis. This process should only take a day or two. Then you can send your payment proposals to each creditor.
After you have sent your payment proposals to your creditors you can start making reduced payments to each of them straight away. You do not have to wait for them to agree. This means that the Plan allows you to get your finances back under control almost immediately.
If I start a Debt Management Plan how quickly will my creditors stop contacting me?
It is important to understand that it will normally take 2-3 months for your creditors to stop contacting you with payment demands after you start your Debt Management Plan. Even though you can reduce your payments straight away your creditors will still need time to review your payment proposal and agree to it. They then have to update their systems.
During this negotiation period the collections departments will still be trying to contact you and demanding you make payments to them. If and when this happens you should confirm that you have sent them a payment proposal and are now paying as much as you can afford.
DM4U tip: Some creditors will only agree to your Plan once they see that you have made at least 2-3 monthly payments to them. They can then feel confident that you are able to sustain your end of the bargain.
If I start a Debt Management Plan how quickly will my creditors stop adding interest and charges?
You must expect your creditors to continue adding interest and late payment charges to your accounts for at least 3 months from the date you make your first Debt Management Plan payments. Your creditors will generally continue adding interest until they have agreed the payments you have proposed.
DM4U Tip: Your Plan is not a legally binding agreement and so your creditors are not under any legal obligation to stop adding interest or late payment charges at all. If you use the solution it is possible that some of your creditors may never stop adding interest. This is particularly the case if they do not agree to the reduced payments that you are making.
Nevertheless if you have given each creditor your financial statement showing that you simply do not have enough money to pay them but you are making your best effort to pay as much as you can then most will agree to freezing or at least reducing the interest they charge.
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