Debt payment plans are arranged by debt management companies, who offer this service in the US, UK and other countries. You will need to approach a company that operates in your own country of residence. What the plan involves is the management company talking to your creditors to agree new deals for paying back their money. This tends to mean that interest charges can be reduced and some fees are often waived. The result of the new arrangements will be that your debt stops getting bigger and you get agreement to new payment amounts that you can afford.

When agreements have been set up with all your creditors, all you have to do is make one payment to the debt management company, and they pass it on to all your creditors. The more obvious benefits of such arrangements are that you only have to worry about one easy payment, and you no longer have creditors phoning you all day long to get their money.

You normally need to have quite a large amount of debt for a debt payment plan to be suitable for you, and the type of debts must be what are known as unsecured debts. All this really means is that you cannot include debts which are legally secured to assets, such as your mortgage. Unsecured debts refer to such things as personal loans, credit card bills and other unpaid bills.

The other requirement if you are interested in arranging a debt payment plan is that you have enough spare income to meet the regular repayments.  It can be a useful exercise to work out your monthly income and expenditure, to see how much you could afford to pay. Include all your regular household costs except your debts, and see what you have left each month that you could put toward the debt payment plan.

If you find that you do not have enough spare money to meet the repayments on a plan, then you may need to look at other alternatives such as debt settlement. This is suitable for people with serious debts and not much spare income, and involves negotiating settlements with your creditors that include writing off significant amounts of the debt you owe. The equivalent to debt settlement in the UK is called an individual voluntary agreement, or IVA.

Most importantly, once you understand what a debt payment plan is and decide you wish to look into it, take some time and care over which companies you contact to help you. It is important to approach at least two of three, so that you can compare them against each other, but it is more important to only approach reputable companies. Look for well established and reliable organisations with a history of helping people to get rid of debt.

Your counselor determines just how much you can actually afford to pay to those unsecured creditors every month in order to eliminate all debts over a three to five year period. Then your counselor meets the creditors to know if they are willing to let you pay only the amounts you can afford. In a few cases, your counselor may also ask those creditors for additional concessions, like lowering your current interest rates and waiving or reducing any fees you currently owe to them. If the unsecured creditors believe that affording you what you need is simply their best shot at obtaining the money you owe, and certainly if they think you will file for bankruptcy (it means they will not get even a cent from you), they may agree to the debt management plan, proposed by your credit counselor. Even so, most large creditors usually set a minimum amount that you should pay each month; and unless you commit to paying your debts, they may not agree to take part in your plan. If some of the creditors refuse to cooperate in this plan, you need to continue paying them based on the original agreements you have with them.

Most creditors agree to offer special concessions to people who pay off their debts with a debt management plan. Of course, they expect that the consumer will not incur more debts while still participating in the plan.