Definition
A repayment proposal is a formal request through a debt management program for restated terms of repayment for an unsecured debt included on a debt management plan.
Analysis
A repayment proposal includes facts about the debtor that will assist a creditor in deciding whether benefits through a debt management program are warranted. These facts include:
- reason for financial difficulty
- total number of accounts included
- total of debt balances
- summary of requested benefits
- proposed interest rate
- proposed minimum payment
- proposed payment date
- request for waiver of fees
- comprehensive budget summary
- request for a response to verify acceptance
When a debtor enrolls in a debt management program, the agency administering the program will contact the creditors included in their DMP with a proposal. Some creditors require for a paper proposal to be faxed or mailed. However, an increasing number of creditors accept electronically submitted proposals, which dramatically speeds up the approval process.
A creditor that approves a DMP proposal may confirm acceptance with the agency, with the account holder or both. A creditor may deny a proposal if they believe the debtor does not deserve benefits. Additionally, a creditor may approve a proposal with changes, meaning that if the consumer and agency agree to the restated terms offered by the creditor, then the debt may be added to the debt management program.
