Hidden negatives with debt management

There are many ways in which debts can be restructured to help during a difficult period financially.

One such solution is a debt management plan. This is an agreement which can shield consumers with high levels of indebtedness from losing their homes by reducing their monthly finance repayments.

Essentially, debt management companies bargain with your creditors, acting for you, making a request to accept a lower monthly repayment which is more in tune with your current financial position. This would be calculated on the basis of what you can realistically manage to repay after deducting your normal living expenses.
It's a good solution but not without its downsides, so consider all options and call for advice first.

The plus points debt management plan:

* All plans are built around you, no one plan is similar
* You no longer have to deal with your creditors, this is take on by your debt advisor
* As part of the process they can help you find ways to save money and budget more efficiently
* It may be possible for your debt advisor to ask your creditors to freeze the interest payable on your debts which makes a huge difference to the amount you repay

The downside to a debt management solution:

* The debt management is not formally regulated
* Because the agreements are informal and goodwill in nature, the creditor can pull out at any time
* Creditors may choose not to put a hold on the interest payable
* In most cases a reduced monthly payment equals a longer repayment term meaning increased interest over the longer term

Talk to us about debt management today