Debt Advice UK

Get your finances in order with a Debt Management Plan

If you are in debt and finding it hard to keep up, you might feel like you are in over your head and fighting a losing battle with your creditors. But don't despair, you are not alone and there is help available that could make a world if difference to your financial situation. There are a number of options available to those who find themselves in over their heads, depending on your personal circumstances. Here, we pay particular regard to debt management plans, which can help you to bring your debt under control without increasing the amount owed in the process.
Unlike other debt solutions, such as filing for bankruptcy, entering into a debt management plan cannot effect your future employability, or current employment status - meaning that you can enter into a debt management plan without any concerns that it will impact on your income or career.

Debt Management Plans...what are they?

A debt management plan is basically an informal arrangement with your unsecured creditors to repay your debts over a period of time. They are prepared on an individual basis, with repayments calculated on your ability to repay your debts without getting into further financial difficulty. The more you can afford to pay, the quicker you can clear your debt.

The typical plan will list all your debts in priority order, such as where failure to make payments would lead to the loss of your home (mortgage), an essential utility (electricity, water, etc), an essential item (such as a car you need to get to and from work) or financial obligations which left unpaid could lead to prosecution (council tax).
After all of these are taken into account, a final plan is drawn up, listing your obligations to pay off your debt.If your plan is arranged as the result of a court hearing brought about by one of your creditors, the court may also freeze interest so that the money you owe does not increase.

When Debt Management can be the solution

Debt management strategies can offer a flexible means of bringing debt under control and could be the solution for you if:
- You have a short term cash flow problem and believe that your financial circumstances will change in the near future.
- You are unable or do not wish to take out any further loans or use the equity in your home.
- You want to remove the pressure from creditors.
- You want to pay all your debts but are struggling with your current repayment schedule.

The pros of debt management
Pros
- A debt management plan is flexible; if your financial situation changes, then your payments can change accordingly.
- If you choose to deal with a debt management company, they will handle all correspondence from your creditors.
- You are displaying a responsible attitude towards your debts which may be looked upon favourably by future creditors.
- There should be no contracts with debt management companies. If you are not happy with the service they provide, just walk away and make alternative arrangements.

There are lots of companies out there offering debt management services which can be broadly defined in two categories; free and fee charging. Fee charging companies make a profit directly from you, where as 'free' debt management providers are funded through the financial services industry.
When considering debt management, you should endeavour to secure the best deal for yourself. As a priority, you want any agreement to include the interest on your debt being frozen. On this note, be wary of companies that promise to have your interest frozen - it is up to your creditors to decide this point and not the debt management companies.
Get debt free, stay debt free

Whatever option you think suits your situation best, it's important to make changes to the way you handle your finances in order to improve your situation and to stop debt mounting up again in the future. To put it simply - don't spend more than you earn!
It is also important to prioritise what you owe and to whom. Obviously, if you are a homeowner, your mortgage needs to come first.

And finally - it is important to remember that no matter the size of your debt - there is a solution.