Debt management – what to consider

All debt solutions come with their own particular advantages and disadvantages but it’s how your own circumstances fit around these that holds the key to deciding whether bankruptcy, IVAs, debt consolidation or debt management are right for you.

Debt management plans could provide an efficient way for you to deal with your debts. Here are five of the main pros and cons of debt management;

Debt management advantages

• Debt management could see your interest and charges being frozen by your creditors
• Negotiations with your creditors to lower your payments are done on your behalf
• Debt management can provide relief from unmanageable debt levels and associated stress
• The process demonstrates your willingness to tackle your debts to your creditors
• Debt management won’t hurt your credit rating as much as other debt solutions like IVAs and bankruptcy

Debt management disadvantages

• Debt management is not a legally binding agreement unlike an IVA
• Your creditors are under no obligation to agree to freeze interest and charges
• It will take you longer to pay back your debts as your monthly payments are lower
• Your credit rating may be affected
• Your creditors are free to raise legal proceedings against you at any time to recoup the money you owe them

A debt management plan can provide you with some breathing space if your debt repayments have become overwhelming and you need time to sort out your financial situation.

The amount you pay to your debt management company every month will be calculated by looking at your overall income and expenditure. Your payments will be distributed amongst your creditors which means that the pressure of phone calls chasing you for money will ease off and let you concentrate on getting your finances back on track.

In order to qualify for a debt management plan your debt should be at least £1,500. This should be between more than two creditors. It’s essential that you’ve got a regular income from which to meet your monthly repayments to your debt management company for them to then share amongst your creditors.

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.