Debt Management | Need HELP? FREE Impartial Property Advice

What is debt management?

Debt management is a means of restructuring your current debt so that you can be given more manageable monthly payments. There a many different debt management companies who provide this service of negotiating with your creditors on your behalf to secure you a more affordable repayment plan.

How does debt management work?

If you have un-secured debts of between £3,000 and £15,000 debt management could be an option for you. Your debt management company will contact all your creditors for example hire purchase, credit care providers and un-secured loan companies, and will make an agreement for them to accept lower payments. The debt management company deals with all the negotiations and paperwork, all you have to do is keep up the lower payments at the agreed rate. You pay this off in one monthly payment to your debt management company, who will take their fee before distributing the rest to your creditors. Some debt management companies charge a fee for this service but there are also those that provide a debt management plan for free.

What are the benefits of using a debt management plan?

Going to a debt management company can relieve a lot of pressure off you; they work as an intermediary and deal with all your creditors so you don’t have to communicate with threatening money lenders. A debt management plan can offer you support and structure, it allows you to budget and plan your finances. Similarly streamlining your payments into just one monthly outgoing makes your finances more transparent and relieves the stress associated with owing money to several different creditors. Most of all, a debt management plan allows you to decide how much you can afford to pay each month so that your outgoings are not more than your income.

What are the drawbacks of debt management?

The reduced payments mean that you will be paying off your debt for a longer time, this means that you will end up paying back more at the end of the plan. Your creditors may also add extra fees to change your agreement. Using a debt management plan may negatively affect your credit rating.

What should I do if I’m considering using a debt management company?

If you think that debt management might be the answer to your money troubles it is important to work out your budget and find out how much you can afford to repay, this will not only control your spending but also inform you of how much you need to reduce your monthly payments by. Many debt management companies provide free, impartial advice about your situation so that you are able to approach a firm safe in the knowledge that you will receive honest advice rather than a hard-sell. Under the Debt Management Guidance produced by the Office of Fair Trading, companies must advertise without using providing misleading information. If you are interested in a Debt management plan you could also seek advice from National Debtline, Payplan or Citizens Advice CAB all of which offer advice about debt management and can help you decide on the best course of action.

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