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Debt Management Plans

A Debt Management Plan is an informal arrangement negotiated with the people you owe money to on your behalf, usually by a debt management company for a monthly fee. In some cases people can negotiate the terms with creditors themselves, although this rarely works out to the benefit of the individual in the long-term.

The aim is to reduce your monthly repayments, but you still have to pay off all your debts and interest will continue to accrue on the money you owe. This normally means that the length of your repayment period is lengthened significantly, often by many years, and due to the ongoing interest you may end up owing more.

This arrangement is not legally binding, so there is no protection from your creditors who can change their minds at anytime and even threaten you with bankruptcy.

Given the above, Debt Management Plans are seldom popular, but they can be an appropriate solution where debt levels are not substantial.

	Advantages
¤	can suspend actions taken against you such as County Court Judgments or bankruptcy
¤	avoids having to sell your home
¤	interest and charges can sometimes be frozen
¤	reduces your monthly payments
¤	keeps your details out of the local newspapers

	Disadvantages
¤	an informal arrangement so your creditors can change their minds at any time
¤	the risk of legal action against you continues
¤	often leads to a significantly longer repayment period, sometimes up to 15 years or more
¤	your debt can actually increase, with you paying substantially more in total
¤	interest and charges often continue to grow
¤	your credit rating and ability to borrow money in the future may be damaged

If you think a Debt Management Plan is right for you, or would simply like to discuss the options available, then contact us now for immediate help. Our friendly team of experts will listen to your individual circumstances and provide you with clear, honest and impartial advice. We are always happy to help.