For those struggling to pay back their debts, a payment plan can ease the strain of making high-interest debt repayments. Instead, creditors allow debtors to pay back debt at their own pace, with reduced monthly repayments.
In this article, we’ll cover everything you need to know about entering into a payment plan, from the benefits to what to do to prepare for the application process.
Let’s get to the following commonly asked questions:
A payment plan is a financial assistance agreement between a debtor and a creditor to pay off any debt through direct debit payments over an agreed length of time. A payment arrangement can be used for most debts, including credit card bills, utilities, and car loans.
Not all creditors are required to offer a payment plan to their customers. Some specify a minimum payment amount or charge interest on the payment plan instalments.
Despite this, payment plans are a practical debt relief option for those that face difficulty paying their bills, helping them to avoid late fees and penalties.
The benefit of a payment plan is that it allows a debtor to pay off a debt in manageable instalments over a while rather than having to pay the total amount all at once. This can be especially helpful for people experiencing financial difficulties or who cannot afford to make a lump-sum payment.
Here are some specific benefits of using a payment plan:
An Australian Taxation Office (ATO) payment plan is an arrangement for taxpayers who cannot pay their income tax debts by the specified due date. It allows them to make payments directly via myGov over some time rather than in one lump sum.
If you’re struggling with paying your tax bill on time, discuss your options with an ATO advisor as soon as possible to avoid fees. Submit your application and apply online here. If you’re struggling to keep up with your existing payment plan, you can change the terms of your plan at any time.
If you’re struggling to pay your outstanding debt, many creditors offer payment plans to help you avoid making an unaffordable upfront payment.
Payment options vary, and it is possible to negotiate a plan that best suits your financial situation. Typically, it will involve setting up a direct debit and paying your monthly bill from your bank account.
You can pay in instalments with the following creditors:
Before applying for a payment plan, debtors should take the necessary steps to prepare, including:
Before setting up a payment plan to pay your fine, fee, activity statements or tax returns in Australia, it is essential to review your financial situation, assess your ability to make regular payments and negotiate a payment schedule that you can realistically stick to avoid additional penalties or fees.
Struggling to pay off debts can be stressful, especially if you’re saddled with high-interest rates and fees. Luckily, many creditors offer debtors the option of entering into a payment plan to ease the strain of paying off high debts.
By using your financial information, they will devise terms that make it easier for you to pay off what you owe. If you liked this article, stay updated with our blog, where we regularly publish financial advice.
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Disclaimer: The author is not a financial advisor and the information provided is general in nature and was prepared for information purposes only. This article should not be considered to constitute financial advice. Accordingly, reliance should not be placed on this article as the basis for making an investment, financial or other decision. This information does not consider your investment objectives, particular needs, or financial situation.