I thought I would look into comparing paid for debt management with a free debt management plan to see what the advantages and disadvantages are.
I had a bad experience during my first debt episode. I made my first payment and the company went bust. I lost the money and I still had all my creditors chasing me.
After that I used Payplan and eventually I set up my own debt management plan.
The Advantages of a Free Debt Management Plan
- You don’t have to pay anything for the service.
- The advice is impartial.
- You should be able to pay off your debt faster because you are not paying for the service.
The Disadvantages of a Free Debt Management Plan
- It may take longer to get your plan set up, particularly if your chosen organisation is very busy.
- In some cases, you will be given templates to use which you would then send off to your creditors. In other words you will do a lot of the leg work.
The Advantages of Paid for Debt Management Plan
- Usually your Debt Management Plan will be set up quickly.
- You normally get a single point of contact.
- They may try to negotiate with creditors to settle some of your debts.
- The Debt Management Company will take care of everything including contacting your creditors and making offers of repayment.
The Disadvantages of a Paid for Debt Management Plan
- You have to pay for it and could be in debt longer than you need to be.
- There have been reports of debt management companies not paying the money to creditors and then going bust. Choosing a reputable company is a must.
I am not sure why someone would choose to pay for a Debt Management Plan but the fact that companies exist for this very purpose suggests that either, people don’t know about the likes of Payplan or StepChange, or they feel they get a better service when paying for it.
I suppose if you want to get things sorted out very quickly then you might feel paying for debt management is the best solution for you.
You could consider setting up your own debt management plan. That is how I am managing my debt today. It can be a lot of work at first but once you get going, there is not a lot to do other than making your payments on time and checking the balance every now and then.