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Debt Management Plans
Debt Management – How does it work?
Debt Management – Advantages & Disadvantages
Debt Management – Discuss Further
If you are having trouble in meeting all your unsecured credit commitments, are under pressure from your loan and credit card providers or are simply finding it hard to cope with all your unsecured credit repayments then borrowing more money, by way of an unsecured loan or secured loan, may not be the right solution for you.
A debt management plan could help to reduce the monthly repayments, in some instances by up to 70% of the full repayments. You would have one easier to manage, affordable monthly repayment. If debt management is not the right solution then you may wish to consider an individual voluntary arrangement.
How does it work?
By allowing a skilled debt management adviser to help you with your debts, they could speak to your loan and credit card providers on your behalf and arrange for them to accept a lower monthly repayment. Once they have agreed lower repayments with all your creditors you would then make one simple monthly repayment to the debt management provider. Your debt manager would in turn pay this to your loan and credit card providers at the new, lower level.
As you will only deal with the debt management provider this will put an end to the high pressure calls from your lenders and reduce the stress and hassle that this can cause. The debt manager will ensure that the loan and credit card companies no longer contact you and will deal with them on your behalf.
The Process
- Your debt management provider will undertake a full review of your current income and outgoings. You will be under no obligation to proceed with any debt management solution.
- They will agree with you a new monthly budget that will be more affordable to you and could be substantially lower than the current repayments that you are struggling to maintain.
- The debt manager will then contact all your creditors on your behalf and explain your situation. They will look to agree a new repayment schedule with your creditors, which is designed to repay your debts and be affordable to you each month.
- Once accepted, you will make one monthly repayment to the debt management provider who will then repay your debts on your behalf.
- Wherever possible they will ask the creditors to freeze all interest and charges on your accounts.
- You will no longer be required to discuss your finances with the many providers that you may currently have. Should you receive any phone calls from the loan or credit card companies then simply ask them to contact your debt management provider.
- You will be kept fully informed of the progress of your debt management plan including regular statements to show how your debts are being repaid each month.
- A debt management plan is not intended to be a long term solution. It is a way to maintain your debts at an affordable level each month until your situation improves or an alternative long term solution can be found.
What are the Advantages & Disadvantages?
- You will have the benefit of one monthly repayment paid directly to your debt management provider.
- All communication will be handled by your debt manager and therefore you will no longer need to worry about contacting many different providers.
- The debt manager will attempt to have all interest and charges frozen.
- Debt management can have an adverse effect on your credit record.
- It could take longer to repay your debts due to you paying less each month.
- If interest is not frozen, your balances could increase.
Discuss Further
If you would like to discuss debt management further and speak to a skilled debt management adviser then please call 08445 888 930.