Benefits of a debt management plan

A debt management plan could help if you if you`ve been struggling to keep up with your unsecured debt repayments. But like any debt solution, debt management does have its disadvantages, too - so you must be sure it`s right for you before you go ahead.

Here is a guide to some of the benefits a debt management plan can offer.

Reduced monthly repayments

A debt management plan involves reducing your unsecured debt repayments to an affordable level, leaving you with enough money to cover your other essential costs (mortgage/rent, food, bills, etc.).

This means your debts will take longer to repay - but you may well consider this an acceptable compromise if it means your debt repayments become affordable again.

Another thing to consider is that repaying your debts for longer may also mean paying interest for longer - and therefore paying more in the long run. However...

Freeze on interest and other charges

Lenders will often agree to a freeze or reduction in interest and other charges during a debt management plan, in which case the longer repayment period won`t actually cost you more in interest. More of each payment goes towards repaying the debt itself this way, rather than interest, so you`ll be able to repay your debts more quickly than you could if interest was still accumulating.

Flexible arrangement

A debt management plan can be more flexible than other debt solutions. As it`s an informal arrangement, it can be easier to arrange changes to your payments if your circumstances require it than it might be on a more formal solution, such as an IVA (Individual Voluntary Arrangement).

For example, if your available income falls slightly, your lenders may agree to accept smaller monthly payments. On a similar note, if your income increases, you`ll be expected to pay more towards your debts each month.

If your circumstances change too much, however, you may find your debt management plan is no longer viable - in which case you`d need to explore your alternative options.

Things to remember

Although it could help a lot if you`re really struggling, the fact you won`t be making the payments you originally agreed will be recorded on your credit history.

Also remember that you`ll only qualify for debt management if you really can`t afford your existing debt repayments, but can still afford to repay those debts in full over the next few years. And even if you do fit the criteria, your lenders are under no obligation to agree to anything.

Find out whether you could qualify for a debt management plan with our free debt test.

Try our debt solution finder

Answer a few simple questions and find out which debt solutions could help you, based on your circumstances.

Your Situation

Your total debt: Please select... £2,000 to £7,000 £7,000 to £12,000 £12,000 to £19,000 £20,000 +

Your location: Please select... England Wales Scotland Northern Ireland

Employment status: Please select... Employed full time Employed part time Self employed Unemployed Retired Student

Your email: (optional)

Your Details

First name: Surname: Telephone 1:

Telephone 2: (optional)

I agree to the privacy policy:

Please remember, this is just an information tool. We would always recommend you speak to a debt advisor for the most appropriate way to resolve your debt problems.

We'll give you an on-screen recommendation and call you. One of our advisors will be in touch to answer any questions you may have about your results.

Your privacy is important to us. All correspondence is held in the strictest confidence and we will only request information required to find your debt solution.

Related resources:

• Debt management plans
• Debt management FAQs
• How we manage your debts
• Advantages of using a debt management company
• Debt management pros and cons
• Is debt management a good alternative to an IVA?
• How can debt management help me?
• Debt consolidation benefits

Tags: debt, debt management, plan, benefits, debt management plan benefits, benefit, advantage, pros

Fees payable when continuing service is provided. Repaying debt over a longer period may increase the total amount to be repaid. Calls are recorded and are usually free from UK landlines. Mobile phone users may be charged and should check with their service provider. Cards are provided by third parties and are subject to eligibility, status and terms and conditions. Applicants must be UK residents aged 18 or over.