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Will I end up paying for longer in a Debt Management Plan? |
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Usually, yes. This is because lower monthly repayments are negotiated on your behalf. So even though the debt will take longer to repay, the monthly repayments will be much easier for you to manage.
This is much better than continuing to struggle every month, having to miss payments and incurring additional charges.
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A Debt Management Plan is a way to pay all of your creditors in one monthly payment.
For instance, if your total debt is £10,000 and you can afford £100 per month then you would be on the Debt Management Plan for at least 8.3 years.
A Debt Management Plan is especially useful if you only need a short term solution; for example, if you’re selling your house shortly and will be in a position to pay off all of your debt in the near future.
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Debt Management Pros and Cons |
You do not have to do any work in relation to your debts, for example, drafting letters to creditors.
There is only one payment to make - to the Debt Management Organisation - and the company distributes the money to the creditors.
You do not have to pay several different companies. Instead only one payment.
If the plan is carried out successfully all Interest and charges are usually stopped.
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The Debt Management Process |
Being in debt causes enough stress without the situation being made worse by demands from your creditors.
By entering into a debt management plan you are given the opportunity to relieve yourself of the stress and responsibility of contact between yourself and your creditors. This will mean that you will not be contacted, or hassled, for any of your debts as long as you stick to the debt management plan.
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Are All Debts Dealt With? |
Yes, all of your unsecured credit and non-priority debts are dealt with. This includes personal loans, credit cards, overdrafts, catalogue debts, etc.
Other types of debts must be given priority because of the serious consequences of not maintaining regular payments. You must continue to make these payments yourself. Examples include your rent or mortgage, any loan secured against your property, hire purchase agreements, council tax and utilities such as gas, electricity and water.
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