If you`re struggling with unmanageable debts, you could find help in the form of a debt management plan. This is an informal arrangement with your lenders that involves asking them to accept smaller monthly payments (based on what you can realistically afford) over a longer period of time than you agreed when you first borrowed the money.
Debt management plans have helped many people over the years, but they may not be suitable for everyone. For this reason, you should discuss your circumstances with a debt adviser before making any decisions. If they don`t think a debt management plan is right for you, they may recommend an alternative debt solution.
It depends how you want to do it. It`s quite possible to arrange a debt management plan on your own, by contacting your lenders directly, telling them you can`t afford your payments as they stand, and negotiating new repayment terms. However, this can be time-consuming and stressful, and not everyone will feel comfortable setting up the plan on their own.
The alternative option is arranging your debt management plan through a professional debt management company. A debt management company can negotiate with your lenders on your behalf, and if the plan is accepted they can also be there as a `point of contact` between you and your lenders, answering any questions or queries while your new repayment plan is ongoing, and possibly - if your disposable income changes - asking them to consider further changes to your repayment plan.
If your lenders accept your debt management plan, you`ll start making regular lower monthly payments.
If your plan has been arranged through a debt management company, you`ll have regular reviews to see if the debt management plan is still appropriate for your circumstances.
Defaulting on (not keeping up with the terms of) your original repayment agreements will show up on your credit report for six years, and while it`s there, this can add to the cost and/or difficulty of obtaining further credit.
Plus, repaying any debt more slowly can add to the overall cost - if your lenders don`t agree to freeze/reduce interest, you`ll pay more because your debt is accruing interest for longer.
For more information on debt management plans and other debt solutions, click here or call 0800 195 2911.
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