Can debt management help with secured debts?

Struggling with debt can be a stressful situation for anyone. Thankfully, there are a number of debt solutions that can help to make your debt more manageable and help you become debt-free. A debt management plan is one such solution.

How debt management works

When you enter into a debt management plan through a debt advice company, your debt adviser will negotiate with your creditors for lower monthly payments, as well as a freeze or reduction on interest and other charges. In some cases, your debt adviser may even be able to reduce the amount you owe by asking that some of the charges (e.g. late payment charges) are written off entirely.

Once the terms have been agreed, you will pay a fixed amount to your debt adviser each month which will then be paid to your creditors on a pro rata basis.

Debt management & secured debts

In almost all cases, debt management plans will not directly cover your secured debts, for example your mortgage. However, since debt management payments for your unsecured debts are based on what you can afford only after your regular bills are paid, your monthly outgoings are reduced and a debt management plan improves your overall ability to repay secured debts.

What if I only have secured debts?

While a debt management plan will not directly cover secured debts, there is still help available.

If you are struggling with secured debts, your first action should be to contact your lender. For example, if you are struggling to make mortgage payments and your difficulties are short-term, lenders will sometimes allow you a brief ‘payment holiday’ – usually spanning a few months – that will allow you to get your finances back on track before resuming payments.

It’s always advisable to speak to a professional debt adviser if you do find yourself struggling. In some cases, all that’s needed to get your finances in order is some financial guidance.

Think Money offer free, impartial debt advice. For more information, call 0800 074 4222 today.

Tags: debt management, secured debt

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