There is no doubt that a debt management plan or DMP can become the solution you are looking for to put a stop to the stress that your current financial situation puts you through. And one of the things that you must be concerned about is the length of time you can get a DMP for.
Now, this is something that has to be determined based on your financial circumstances. And it is not the same for all people. The amount of time that a DMP can be in effect ultimately depends on four major factors as stated below.
One, the length of DMP shall depend on the amount of debt you are in at the time of the enrolment. Since you are having difficulty coping with the regular repayment on your debts, the amount which you are to pay including the period for which the DMP will take effect shall depend on your financial situation. But the first consideration is amount of the remaining balance on your debt.
Two, the type of the plan you enrolled in also matters in determining how long DMP shall last. Specifically, it matters whether it is fee paying or non fee charging. The main difference is in the way the debt management agency charges you for the service.
What fee charging simply means that the agency takes out a certain percentage from the reduced monthly repayments as agreed upon under the DMP. Non fee charging, on the other hand, refers to a non paying service. In other words, the agency does not charge you anything. These agencies can offer their services to you for free as they have managed to come with into terms with the creditors where they get paid by the creditors themselves.
Three, it also depends whether your creditors will agree to freeze or maintain the interest rates while you are under a debt management plan. The things is just because you are in a DMP does not necessarily mean your creditors will automatically freeze interest against your debt too. A DMP after all, lacks a legal binding solution. In which case, the creditors are not obliged to stop charging interests.
Four, the length of the DMP will be based on how much you can actually pay every month. One of the benefits of being in a DMP, as long as your creditors agree to it, is that you will only be obliged to pay how much you can actually afford. This means your essential living expenses shall be deducted from your income, whatever is left after that will be paid to the creditors in a monthly basis. Now, however long it will take for you to finally pay your dues is dependent on how much has been agreed to in terms of monthly repayments.
All these factors will ultimately help determine how long you need to take to be under the protection of DMP. And this is how you can count on debt management plan to solve your seemingly insurmountable financial issues.
