Debt Repayment Plan: What Is It and How to Make One

The term “debt repayment plan” can refer to a few different things. In the simplest terms, it can refer to a personal pay off plan that you set up to eliminate debt. More formally, you can enroll in debt repayment plans to pay off specific types of debt in the most efficient way possible. The goal is usually to find the fastest way to get out of debt with the lowest interest charges. This helps you avoid things like bankruptcy and save your credit score from damage.

Different plans for different debts

In general, repayment plans can apply to any debt you owe that doesn’t involve collateral — i.e. unsecured debt. Depending on the types of debt you need to pay off, you may need several repayment plans, each one handling a specific type of debt.

• Credit card debt: This is the one type of debt where you can make a debt repayment plan on your own; we tell you how below. There is also an assisted plan called a debt management program; you go through a credit counseling agency for that.
• Federal student loans: There are a range of federal student loan repayment plans that you can use to accomplish different goals. Some help you pay off debt quickly to minimize interest charges; others offer low monthly payments to fit your budget.