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Debt management plan



A Debt Management Plan (DMP) is a method used in the United States and elsewhere for paying personal debts (which typically have gotten out of control in the sense of payments due taking too large a portion of income, or even exceeding it) that involves cataloguing all the debts, assessing income and budget, and re-negotiating interest rates and payments with the lenders, based upon evidence that the result will be a higher liklihood of collection by the lenders. The simplest form of such a plan is done by creating a budget for paying debts, and then paying all the minimum payments on time from the fund created by the budget, using all extra funds each month to make pre-payments on the highest-interest debt first (assuming no pre-payment penalty exists), not taking on new debt until all the debt is paid.



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