A Debt Management Plan is one of the available solutions for Debt problems. A Debt Management Plan is an informal arrangement between you and your creditors.
Why would you choose a Debt Management Plan then? This post looks at why you would choose one and also provides information on the drawbacks of a Debt Management Plan.
Why choose a Debt Management Plan?
– You can set up your own Debt Management Plan if you wish to do so because of its informal nature. The process is normally quite straight forward.
– There are no records of your Debt Management Plan. However your credit rating is probably already in a bad way with late payment markers or defaults.
– There aren’t any fees to pay to set up a Debt Management Plan unless you use a fee charging company. There are organisations out there who can provide you with a plan at no cost see the helpful links section of this blog.
– You make one monthly payment (unless you opt to do it yourself) and so long as you maintain your payments things should settle down.
And now, time for why you might not choose a Debt Management Plan as a solution for your debt problems.
Why not choose a Debt Management Plan?
– The agreement between you and your creditors is not legally binding. This means a creditor can take further action against you if they wish to. For example they may decide to issue proceedings through a county court.
– Interest and Charges may not be frozen meaning you could be in debt for a long time.
– Because interest and charges might not be frozen, it can be difficult to know exactly when your debt will be repaid.
– Creditors can still contact you about the debt and ask for an increase to your payments. They may still call and write to you.
– With a Debt Management Plan, you will pay back everything you owe plus interest if that is still being charged. If you are doing your own Debt Management Plan you might be able to make full an final settlements towards a particular debt.
Where can you get help with Debt?
If you are in debt and are looking to start tackling the issue then help is on hand. If you visit the helpful links page on this blog, you will find a list of organisations who can help you with your debts. StepChange Debt Charity are a good place to start and they should be able to provide you with advice on your situation.
If you are interested in finding out what’s involved with setting up your own Debt Management plan then for details see setting up your own Debt Management Plan.
Good luck with sorting out your debt issues.