Debt Management Plans – Debt Management Company Offering Services Across Australia
Are you worried about bad debt? Are you thinking about bankruptcy? A debt management Service through Debt Fix could be the solution
If you and your creditors don't see eye to eye, bringing in a third party to mediate on your behalf could help. Debt Fix's debt management services bridge the gap between borrowers and lenders to help both parties understand each other and reach an affordable and sustainable outcome.
What is a Debt Management Plan (DMP)?
A Debt Management Plan (DMP) is an arrangement made between debtors and creditors, with help from debt management firms. The plan replaces your previous obligations and commitments to your debts in favour of a new structure which is more affordable and representative of your current circumstances. With a DMP, you'll have a new repayment schedule and a new relationship with your creditors.
Debt Management Plans are intended to help you settle debt and improve your financial position. For many people, this is preferable to the alternatives of a Part IX Debt Agreement or declaring bankruptcy.
How can a Debt Management Plan Company help?
If you've taken on more debt than you can afford to pay, the problem may get worse before it gets better unless you make a change.
Missing payments could result in you paying increased interest rates and penalties or defaulting on your loan or credit card, which in turn will likely harm your credit score, effecting your credit reputation and making it difficult for you to borrow in the future.
If you continue to miss repayments and fall in default, it won't be long before you receive contact from professional debt collectors.
There are several options for breaking the debt cycle and getting your finances back on track, but a Debt Management Plan is one of the most straightforward. With the support of an experienced debt management company, you won't have to deal with the stress and complications of negotiating with creditors yourself and you can look forward to peace of mind.
When you talk to a Debt Fix advisor about our Debt Management Program, we will also discuss the other options available to help you make an informed decision.
How do Debt Management Companies work?
Debt management companies can speak to your bank, debt collectors or other creditors on your behalf to discuss your situation and negotiate a more favourable deal. This may involve lowering your monthly repayments or interest rate, waiving fees and charges, or other debt relief strategies to help you get back on your feet.
What type of debts are covered with our Debt management Plans?
Debt Management Plans cover most unsecured debts. These are debts that are not tied to an underlying asset, such as a house or car. The most common types of unsecured debt in Australia are personal-loans and credit card debt. Students loans are not covered.
What do I need to do?
If you believe a Debt Fix Debt Management Plan may be an option you wish to explore, you’ll need to provide us with information about your debts and your financial circumstances so we can give you a free debt analysis.
We will need to know:
- The total amount of debt you owe and who you owe money to
- Your monthly income and expenses
- The cause of your financial difficulties
With this information, we'll work closely with you to calculate how much you can comfortably afford to pay each month within your budget. We’ll also discuss your financial goals and help you plan a debt free future.
What happens next?
We’ll draft your Debt Management Plan (based on your budget and circumstances) and contact your creditors on your behalf to explain your situation. Lenders in Australia are obligated to consider requests for debt relief when borrowers are experiencing financial difficulty. While relief is not always granted, there's a higher chance of success when the case is made by a skilled financial negotiator.
If your creditors agree to the reduced payment plan, we'll start drawing funds from your nominated account to transfer to your creditors. The funds you pay will be affordable as determined by your budget and will be forwarded to your creditors to settle the debts.
Your new agreed payment schedule will be on more affordable terms as arranged on your behalf by your Debt Fix Debt Management Specialist.
It's essential that you keep up with your repayments otherwise your creditors may elect to cancel the DMP. If you start to miss repayments, and your creditors cancel the plan, your situation will return to that place where you were before the DMP was set up, resulting in increased fees, penalties and higher interest rates. In other words, if you default on the DMP, you financial stress will return. Debt Fix Debt Management Specialists are always on hand if you're worried about your plan or you need some assistance.
Pros and cons of debt management Program
A Debt Management Program isn't for everyone. When you contact Debt Fix for Debt Management Solutions, we'll make sure you understand both the advantages and disadvantages so you have a balanced perspective.
Benefits of Debt Management Plan
- Debt Fix will negotiate with creditors on your behalf, so you don't have to
- Debt Fix will negotiate a reduction in your overall debt repayments, a lower interest rate or a longer repayment term to make your debt more affordable
- Consolidate debt repayments into a single monthly payment, making it easier to manage
- Help to avoid legal action, debt collection and formal insolvency procedures
- Less impact on your credit history compared to a formal debt agreement or bankruptcy
In general, a debt management plan is well-suited for people who need debt relief to help them overcome their current financial problems and get back on their feet.
Disadvantages of debt management
- Creditors may not agree to provide debt relief in all cases
- An informal agreement may be subject to change without notice
- Although your repayments may be lower, you may be required to pay over a longer term
- You may have difficulty applying for credit while under the agreement
- A Debt Management Plan will likely affect your credit score
A Debt Management Plan may not be suitable if you're want to continue to rely on credit.
What are the alternatives?
Before making any financial decision, it's important to know all your options. Your Debt Management Specialist will explain all your options so you can make an informed decision.
Depending on your individual circumstances, options may include:
- Debt consolidation loan – A loan which combines multiple debts and credit cards into a single consolidated loan which allows you to settle debts with single monthly payments at a lower interest rate. However, this may not be an option if you have poor credit or if you have no assets.
- Debt agreement – if you don't qualify for a debt consolidation loan and you have assets you want to protect such as a car or a home, a formal debt agreement is an alternative to bankruptcy. While your debt will be settled, this will impact your credit history and your name will appear on the NPII register for a limited time.
- Bankruptcy – a last resort if you're trapped in debt, we recommend exploring formal and informal debt settlements before considering this option, as there may be long-term ramifications.
There's no quick fix for becoming debt free. A debt management plan takes dedication, but it's often the best option for helping you to pay off debt and maintain your credit score.
Why choose Debt Fix for Your debt management Solution?
We deal with creditors, so you don't have to
At Debt Fix, we understand what it's like to feel trapped in debt. We've helped thousands of Australians from all walks of life manage their debts through tailored solutions.
We know there's no one size fits all solution to becoming debt free. That's why we'll make sure we understand your unique situation, so we can recommend the most effective strategies that match your needs and your ability to pay.
Contact Debt Fix today to speak to our friendly team so we can help you take the first steps to a life free from debt.
Call us now on 1300 332 834 for an obligation free analysis.
Looking for more ideas to ease the burden of debt? Read these tried-and-tested debt tactics.
Visit the Debt Fix blog for regular tips and advice to help you free yourself from debt.