INFORMAL DEBT MANAGEMENT PLAN
What is an Debt Management Plan?
An Informal Debt Repayment Plan is simply an agreement with your creditors to reduce the amount you pay to them each month so that the payments fit within an affordable monthly budget. The plan is known as “informal” because it is not legally binding on your creditors. It is simply a “Gentleman’s Agreement” made between them and you to reduce your debt repayments.
The amount you can afford to pay to your creditors each month is known as “Disposable Income”. This is calculated by taking your total monthly household income and deducting all reasonable living expenses. The money left over is called Disposable Income. This is the amount which is paid to your creditors each month.
An informal Debt Repayment Plan can normally be managed for you so that you are able to make a single affordable monthly payment which will cover all of your creditors. Using this solution will enable you to start repaying your creditors without having to borrow more and constantly “Rob Peter to pay Paul”.
Advantages of an Informal Debt Repayment Programme:
* Reduce monthly payments to a single affordable amount.
* Repay Creditors within a budget you can afford without having to
borrow more.
* Stop robbing Peter to pay Paul.
Disadvantages of an Informal Debt Repayment Programme:
* You will normally have to repay 100% of all your debt which may take many years.
* Your debt repayment period may be significantly increased as you are paying less off your debt each month.
* Default notices will be recorded on your credit file. This will mean that you will find it difficult to get further credit until your debts are repaid or settled in full.
* Creditors are not under any legal obligation to suspend interest or late payment charges.
* Secured debts (ie mortgages and car HP) and Crown Debts such as Council Tax can not be included in an Informal Debt Repayment programme.
What will it cost?
You may be able to get help with an informal debt management programme for free. However, most companies who provide these services will make a charge. This is normally the first payment that you make and also an ongoing monthly management fee of between 10-15%.
Best Regards
Oliver
Thomas Charles and Co Ltd.
Experts in personal debt solutions.
Read customer feedback at:
www.thomascharles.com/about_us.asp
