Today, majority of the people are entrapped in the net of debts, without knowing the exact way to use them. These loans can be taken in account of studies or house, or in form of credit cards.

When it comes to debt, it is important to understand that one has to act fast. If you find yourself unable to deal with your debt, instead of delaying, it is better to look at your options, and decide how you want to manage it. A Debt Management Plan is a method that can be used to pay off unsecured debts. It is used in situations where there is no other way out, and the debt far exceeds the income of the debtor.

Through the involvement of a triennial, a DMP is agreed between the creditors and debtors. This agreement is based on planning paybacks of all unsecured debts like personal loans, credit card loans, bank insolvency and store card debts. But this plan does not deal with any secured debts like mortgages, car HP payments, rents and utilities.

A DMP ensures a predetermined and unchanging amount of money every month, to be paid by the debtor to the creditor. This payment amount is decided in accordance with the affordability and ease of the debtor with which he can pay the monthly instalments. Therefore, a DMP makes debts payment process easier and comfortable. Moreover, debt interest rates are also subordinated through this agreement.

A big pro DMP point is that you do not have to face the creditors directly. In fact the DMP Company itself manages the dealings of both the parties. A DMP provides you emancipation and tranquillity when you have once paid your monthly amount, because you do not have the fear of harassment from your creditors or of any legal action taken against you.

DMP is of two types. The first type is the free supported organizations, which do not take any fees for counselling. In fact, your paid money directly goes to your creditors. Indeed UK has set up various Consumer Credit Counselling organizations that provide you with free DMP, even on telephone and on websites. Moreover, you can surf on the internet to search out for your desired organization.

The second type of DMP is one, for which you have to pay a certain fees. Usually, the fee is a percentage of the monthly payments paid to creditors. One can choose among many companies offering DMP services, and have different rates. One disadvantage is that the company may not act in your best interests, and may be more concerned about their share in the payments than your debt paying potential. It is important to be wary of fraudulent companies that are unreliable, and charge you exorbitant fees.

The kind of DMP you choose depends upon your preferences and comfort. If you cannot afford to pay fees, it is better to go for a credit sponsored DMP organisation.

Edwood Woodward is a financial consultant. You may consult with him to know debt problems solutions and take his assistance to make financial decisions of your life at

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