Explaining some of the main myths surrounding debt management

If you haven’t had the need to look into debt management before then it can be easy to become confused by some of the common misconceptions surrounding it.

In this article we’ll put the record straight and give you a general overview of what debt management involves;

• The term “debt management” – This can often be misconstrued and many people think debt management is an overall general term for dealing with your debts. It is actually a more specific term for a particular debt solution.
• Can debt management help reduce your debts? – The answer to this is no. Under a debt management plan you will pay your creditors a reduced monthly amount but your original level of debt still remains and will have to be paid off in full at some stage.
• Long term debt management - If you need a long term solution to your debt problems then a debt management plan may not be your best option. It offers a short to medium term solution and is most suited to those who need some breathing space to pay less every month while they sort out their finances. For example, this could be while you look for a new job after being made redundant.
• Interest and charges – Debt management plans are an informal agreement between you and your creditors. It’s entirely up to them to decide whether or not they will freeze the interest and charges on your debt while you’re making the reduced payments. If they choose not to then your overall level of debt will rise throughout the duration of your debt management plan. Many companies will make promises to get your interest and charges frozen but this is not their decision to make and where a lot of misunderstanding originates from.
• Uncertainty – Many people wrongly assume that because a debt management company has negotiated a reduced monthly payment plan with all their creditors that the agreement is set in stone. However, this is not the case; debt management plans are an informal agreement and are not legally binding on either party.
  

If you’re unsure of any aspect of debt management and how it could work for you then it’s critical that you get professional debt advice and take the opportunity to ask any questions you may have.

To find out more about any of our debt services, call us free today on 0800 043 4747 or find out how you can benefit from a debt management plan.