Debtors Anonymous - Record Keeping and Planning - Debt Repayment Plans

Debt Repayment Plans

Practicing the Fourth Step of the DA's Twelve Steps includes not only a moral inventory of personal characteristics but also an inventory of personal financial history including a list of current outstanding debts. Similarly, the Ninth Step includes monetary debt repayment. Following the language of the Ninth Step, however, the payment schedule should not injure the debtor or the creditor. The goal in repaying creditors is to do so while living well. DA members find their ability to pay their creditors improves when they take care of themselves. Payments to creditors should be consistent and manageable. In this way, members are able to offer detailed rationale for their debt repayment schedule, allowing for empowered and functional negotiation with creditors. In this spirit, a certain amount of money is allocated for debt repayment each month whenever possible.

One might begin making a debt repayment plan by categorizing secured and unsecured debt, including the name of the creditor, the total amount owed, when the amount will be paid off, and the current monthly payment. For each debt one would list the current balance, finance charge per month, the minimum payment per month, and include a blank column for the "actual" payment. The amount of the actual payment would be determined from one's spending plan, after subtracting necessary expenses and the amount of money required to support a reasonable quality of life. This amount would then be divided up among the creditors. Ideally, the payment to each creditor is proportional (based on the amount of money owed to the creditor divided by the total liabilities). Creditors should not be given special treatment because they harass a debtor with greater frequency than other creditors. One may, however, give preference to creditors charging higher interest rates, threatening legal action, or who are friends or family members.

DA recommends recording each payment made to a creditor, noting the original amount of the debt, the date the payment was made, the amount of the payment, and the remaining balance. Further, DA advises keeping a record of retired debts to record the date each debt was fully paid.

Although it may conflict with cultural norms, DA recommends taking a debt moratorium when a debtor cannot put his or her needs first and continue to making debt payments. Before taking a debt moratorium, DA suggests checking with one's sponsor, pressure relief group, and to contact one's creditors to explain the situation. If a creditor threatens to take legal action under these circumstances DA recommends seeking professional assistance or revising the moratorium.

Read more about this topic:  Debtors Anonymous, Record Keeping and Planning

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