Once you’ve realised that your financial situation is out of control, there often seems no way out. However managing your way out of debt through a debt management plan, usually follows a 5 step process.
5 steps
- Seek advice
- Assess your current financial situation
- Involve creditors
- Seek agreement
- Stick to it!
It may seem too simple, but these five steps are the foundations of managing your way out of debt.
- Seek advice. Perhaps the hardest step for many people. Many people say that admitting they have debts is the hardest to come to terms with, perhaps because they may have feelings of shame. This is, however, the most important step to take. Debt advisors are available to speak to and, if you call us, our advice and recommendations are free.
- Assess your current financial situation. Getting a clear understanding of your financial situation is the next step to managing your debt problem. A debt advisor will help you do this and will go through all your debts and credit agreements and prioritise them. Then they will work through details of your monthly income and living expenses. The professional debt advisor will then be able to advise you on the most appropriate solution based on your individual circumstances.
- Involve creditors. At this stage, if you haven’t already done so, you need to let those you owe money to, i.e. your creditors, know about your plan, because they need to agree with it for it to work. However, if you decide to work with a debt management company, even better, because it’ll speak to your creditors for you about this.
- Seek agreement. Most creditors are open to working out a plan with you and debt management companies to repay a debt that’s got out of hand. Their view is that it’s generally better to get a smaller amount back regularly, than next to nothing or nothing at all.
- Stick to it! Once you’re paying into your plan, you must stick with it. Although it might be tempting to stray, don’t!
Whilst we make every effort to ensure this article is as up to date as possible, Accuma cannot be held responsible for changes in legislation or developments in case law since this article was produced and published. Article produced 8th July 2008.
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