Can I arrange a debt management plan on my own?

A debt management plan is an informal debt solution. As such, it doesn`t have to be set up by a professional debt management company - if you`d prefer, you can `go it alone` and negotiate with your lenders directly.

But before you make your mind up, it`s important that you`re familiar with what`s involved in a debt management plan.

How does a debt management plan work?

A debt management plan can help people who can`t afford their monthly unsecured debt repayments. It involves making reduced monthly repayments towards your debts, based on what you can afford. You must still be able to repay your debts in full, though, and you`ll have to pay as much as you can on a monthly basis.

Your unsecured lenders are under no obligation to accept this, but they are likely to if they can see it`s the most realistic way for them to get back the money you owe them.

If it is accepted, you may also be able to negotiate a reduction or freeze in interest and other charges. This can stop your debt from getting any bigger, meaning that more of each payment you make will reduce the balance on your debt, rather than going towards interest.

Your debt management plan can last until your circumstances have improved (and you can start paying more every month), or until your debts are cleared.

Of course, as with any debt solution, there are a few downsides. Because you won`t be making the payments you originally agreed to, your credit rating will be affected. You`ll also have very little money for anything other than essential costs until your debts have been cleared. Finally, repaying a debt more slowly quite simply means it takes longer to clear.

On my own or with a professional debt management company?

To set up your debt management plan alone, you`ll need to speak with your lenders directly. You`ll have to provide them with a budget plan, detailing your income and outgoings, to demonstrate how much you can afford to pay towards your debts each month.

Some people prefer to be in control this way - although things could get quite complicated if one or more of your lenders aren`t happy with what you`ve proposed. Others may find the whole process daunting.

This is one advantage of using a professional debt management company - they can negotiate with your lenders on your behalf. They`ll also act as a point of contact between you and your lenders once your debt management plan has been agreed. This can make the process of arranging your debt management plan a lot less time-consuming and stressful. They may charge a fee, so it`s important to find out what you`d pay and what you`d get for this.

For more information on debt management plans, click here or call 0800 195 2911 and our expert debt advisers will be happy to help.

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Tags: debt, debt management, management, alone, DIY, DIY debt management

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