We ask what costs are involved in setting up a debt management plan and whether there are alternatives to paying these costs.
If you are thinking about using a debt management plan (DMP) to solve your debt problem then an important factor to consider is what costs will be involved.
If you want a debt management company to provide a DMP service for you they will normally ask you to pay two types of costs.
There will be an initial cost to set up the debt management plan for you and then you will have to pay an ongoing cost if you want the debt management company to run your DMP for you.
Most debt management companies will make an initial set up charge for putting your debt management plan in place.
This initial charge will cover preparing your income and expenditure statement with you and carrying out the negotiations with your creditors to reduce your monthly payments.
The cost of setting up your debt management plan will normally be equal to the first one or two payments that you pay into the plan.
In other words, the first one or two payments you make will not go to your creditors. They will be kept by the debt management company for the set up work that they do.
Once your debt management plan is up and running the debt management company will then start to charge and ongoing management fee.
The cost of this management fee will normally be around 17% of the amount you pay into your plan each month.
The fee is charged to cover the cost of managing the monthly payments to each of your creditors and any ongoing negotiations that are required to ensure your creditors freeze their interest charges.
The DMP management fee will be automatically deducted from the payment you make into your plan each month.
You need to understand that by paying this fee, not all of the money you pay into your debt management plan each month will go to your creditors and this will add to the overall time it take to repay your debt.
If you are concerned about the costs involved with setting up and running a debt management plan, there are some cost free alternatives you could consider.
The first thing you could look at is the possibility of setting up and managing a DMP yourself.
There is nothing to stop you negotiating a debt management plan with your creditors yourself and then managing the ongoing payments.
Alternatively you could pay a debt management company to set up the plan and then manage the ongoing payments yourself thus saving the ongoing management fee.
If you do not want to set up and manage your debt management plan yourself, you could consider using a free service. There are one or two organisations that will set up and manage a debt management plan for you for free
Many people decide to pay a debt management company to set up a DMP on their behalf rather than doing it themselves or using a free service. There are various different reasons for this.
You may feel that you do not have the time or the confidence to negotiate with your creditors yourself.
Using a reputable debt management company means you can be sure that any objections raised by your creditors will be dealt with and the company will do their best to get interest and charges stopped.
You may also want to be confident that the company you are working with focuses on your interests.
If you use a free debt management service there is always a question as to whether the company is working in your best interests as ultimately the DMP service is paid for by the creditors themselves.
As with all debt management solutions, the cost of a DMP is an important thing to think about when deciding if it is the right thing for you.
The key thing is to understand exactly what you will be charged and why. Then you can make a sensible decision about whether the DMP is the most suitable option for you.
James Falla is a debt management solutions expert and author. He has fourteen years of experience of implementing debt management plans for people who are struggling with personal debt.
In 2004 James co founded Thomas Charles a specialist debt management solutions company where he personally helped hundreds of clients implement debt management plans. James is now the managing director of and senior debt advisor for Wilmott Turner Financial Services which operates debt solution websites such as www.beatmydebt.com.
Watch the video related to debt management
Dr. DeForest “Buster” Soaries Jr., pastor of First Baptist Church of Lincoln Gardens in Somerset, New Jersey, talks about the faith-based model that his church created to help people get out of debt.
I could cry reading your post. I completely get your not wanting to divorce, but… read your post. What would you tell your best girlfriend she should do? Would you tell her to stick it out with this man? It is one thing to treat you roughly, but threatening your child? Draw the line in the sand.
What are you getting out of this and what do you think will happen if you two are not together anymore? Why is the way he is acting acceptable to you. By your actions there is implicit – tacit agreement that it is OK.
Listen to your mom and dad. They want the best for you and your baby. Go to a good attorney (have them help you find one) and get a legal separation and truly abide by it. He will tell you what to do like separating your finances (you need to do that) and setting up child support. That completely eliminates his immature acts (and really painful and harmful acts by the way) of threatening with money etc. It is just a mature, responsible thing to do and protects your child. Tell your atty. about the threats to your child.
Buck up my friend. It may be a bumpy ride. Protect your money, mind the attorney, lean on your friends and parents and… really really really look at what this relationship with this man is doing to you and your baby. You go around once. Don't reisgn yourself to this.