Loan and Equity Help

At a time like this, many people are finding it increasingly difficult to manage their finances. So how - and who - could debt management help?

Debt management is designed to help people who cannot afford their debt repayments.

When someone enters a debt management plan with a professional debt management company, the organisation will talk to their unsecured creditors and ask them to accept lower monthly repayments, based on what the borrower can realistically afford. They may also ask them to reduce interest and/or waive charges - although creditors are not obliged to agree to any changes in their repayment plan.

At a time like this, one important aspect of debt management is the fact that it doesn’t rely on house prices and/or access to further credit. This means it isn’t directly affected by problems in the housing and credit markets - unlike other debt solutions, such as debt consolidation loans.

Debt management is about negotiating with lenders, informing them that you can’t afford to repay your debt as originally agreed - possibly due to a change in your financial circumstances.

But is debt management right for everyone?

After speaking with a professional debt adviser, some people might find that debt management isn’t the right debt solution for them, and that they might be better off with an alternative debt solution, such as an IVA (Individual Voluntary Arrangement).

Be aware that if you enter a debt management plan, you are defaulting on your original repayment agreements. This will damage your credit rating for 6 years - which could make credit harder and/or more expensive to obtain for that time.

Finally, if you agree to repay your debts over a longer timeframe, it may increase the overall cost, due to interest charges.

Note: If you can afford to keep up with the repayments to your debts - or if you don’t think you’ll ever manage to repay your debts - then debt management is not right for you.

For more information on debt management, and to find out if a debt management plan would be right for you, you should contact a professional debt adviser.