Debt management & household costs

Balancing your debt repayments and your other commitments can be difficult. When your finances are stretched to their limits, managing your debt alongside your other costs can be a balancing act.

If you can`t keep up with your debt repayments, a debt management plan could reduce your monthly outgoings and enable you to make sure all your commitments are met on time.

What will a debt management plan cover?

In general, a debt management plan will directly cover your unsecured debts - for example, personal loans, credit cards or overdrafts.

If your unsecured lenders accept the terms, your monthly payments on a debt management plan will be based on how much you can afford after your essential commitments have been taken care of - and this includes both your bills and your secured debts (e.g. your mortgage or a secured loan). So a debt management plan can help you stay on top of your secured debts and household bills.

Bear in mind that repaying any debt more slowly can add to the overall cost as it`ll spend longer accruing interest. Plus, defaulting on your original agreements will show up on your credit report for six years, which can make it harder and more expensive to obtain credit.

How debt management works

A debt management plan is an informal agreement between you and your creditors in which you will make reduced monthly payments towards your debts, based on how much you can afford to pay.

It`s possible to arrange a debt management plan on your own. However, because this can be a time-consuming and stressful process, many people prefer to use a professional debt management company, who can negotiate with creditors on the borrower`s behalf.

As well as a reduction in the amount you pay to your creditors each month, it may also be possible to negotiate a freeze or reduction in interest and other charges. This can prevent your debts from growing.

For more information on debt management and a range of other debt solutions, talk to one of our debt advisers on 0800 195 2911.

Tags: debt, management, debt management, household, bills, essential debts, priority debts

Our initial advice on your best financial solution is free. Fees payable when continuing service is provided. Calls may be recorded for training and quality purposes.