Debt Managment

A debt management plan entails a series of steps, which the third party service works on with the help of the debtor. The first step typically involves compiling a list of all creditors and the amounts owed to each. Some creditors are not eligible to be included in a debt management plan, and typically, secured debt such as car loans and home loans are not included.

Once a list of creditors is compiled and the amount of debt is totaled, the debtor’s total income and expenditures, such as mortgage or rent payments, car payments, cost of living expenses, and so forth, are totaled as well. The third party agency assisting with the debt management plan then helps the debtor to determine the maximum amount of money available to allocate to the plan for debt repayment. In many cases, a third party service will attempt to settle some debt amounts and exclude or lower any interest charged during the repayment period. However, it’s important to understand that participating in a debt management plan will still impact your credit score, and that any available credit may be inaccessible for a period of time. Further, if you have less than 10,000 US dollars (USD) of debt, you may not qualify for a third party service.