Some people might consider this a good idea not to make payments at all. This is not the best idea in the case, still some of the debtors resort to this inadequate solution. The first several months seem to be quite fine, however than the situation changes drastically, as the debt starts accelerating rapidly.
The debt problems are not going to vanish just because you’re not in the mood to make monthly payments. Until the creditor considers the debt to be paid off in full or as settled, there’s no way you can get rid of it.
If you go on ignoring the creditor calls, you might lose the most valuable pieces of your property, such as your car or house, get the garnishment on your wages, and get the lawsuit knocking at your door.
This all may as well end up in the court, where the exhausting hassle will take place. The new bankruptcy laws involve the severe testing of your financial status in order to make sure you’re not trying to hide your incomes for not to pay off the debt. Before you turn to this option and file for bankruptcy, your debt can rise several times due to multiple fees and charges.
Consider the other options
If you do not feel like getting involved in the DMP, use the possible alternatives to fix your financial state. You may use the benefits of the debt settlement procedure, enroll into the debt consolidation program or even resort to bankruptcy.
Unlike DMP, the debt settlement is meant to reduce the total amount of money you owe to your creditor. The company negotiates on your behalf in order to talk the creditor into lowering the credit sum. In this case the payment of some part of the money will be enough to close the debt.
This option is more or less similar to the previously mentioned one, since it is also created to reduce the number of payments. Here multiple loans are replaced with a single one, so you get the whole set of benefits. First of all there will be less paperwork, since you have to deal with one single loan instead of multiple ones. The calls from the creditors stop, as you have paid everything to them. You use the big loan to pay off the smaller ones.
This is the last resort for the person who can’t afford any of possible ways of payment. According to chapter 7 and Chapter 13, the person can file for bankruptcy.
The chapter 13 requires you to create the payment schedule for the next 5 years. According to Chapter 13, you will be protected against the collection actions, while in debt management plan you will most likely lose the chance to continue the program.
The bankruptcy gives the severe hit to your credit history since it stays there for a decade. The debt management plan doesn’t have this disadvantage.
Chapter 7 bankruptcy is meant for people with even deeper troubles. Here you will get most or even all of your debts cleared. However you will most likely lose the most valuable belongings to cover the debt.
Still it’s also the considerable way to become debt-free.