Debt Management
Debt management could be an option if you have can’t get a debt consolidation loan or don’t qualify for an IVA. A debt management plan is an informal agreement with your creditors which can reduce your monthly payments and sometimes stop interest.
Debt Management > Key facts:
- Informal agreement with creditors
- Could reduce monthly payments
- Could result in interest been frozen
Debt Management Plans > How they work
A debt management plan is a mutually beneficial way to work with your creditors which allows your creditor to recover your debt whilst reducing your monthly payments. It is possible to arrange your own debt management plan, however due to time & communication constraints many people choose to go through a debt management company. The debt management company will analyse your situation, contact your creditors to negotiate on your behalf. They will represent you to your creditors, collect your reduced monthly repayment and distribute it evenly between them until your debt has been repaid.
Steps in arranging a debt management plan
Follow these steps to arrange your debt management plan:
1 – Make a list of all your existing creditors and the debts associated with them. Also make a list of your monthly income and expenditure. Both these items will be needed when arranging your debt management plan.
2 – Research debt management online. Take some time to research the different debt management companies, who they are, and what they offer.
3 – Contact a handful of debt management companies. Speak to a number of providers, get to know the market and understand what each company can offer. Ask for some advice! Initial advice will usually be free.
4 – Choose a debt management company to progress with. When you find a company you’re comfy with, discuss your options with them. Consider whether debt management is really the best option for you.
5 – Cooperate with your adviser and get any requested information to them as quickly as possible. Liaise closely with them to answer any questions – it’s in your interest!
6 – Your debt adviser should now contact all your creditors and negotiate terms on your behalf. All you need to do is make your regular monthly payment.
Debt Management Companies > Choosing the right one
It’s not always easy to tell if you’re dealing with a reputable debt management company. A good place to start is DEMSA (Debt Managers Standards Association).