A common worry for people struggling with debt is that they could lose their home. However, there are debt solutions that could help you keep up with your mortgage payments as you clear your unsecured debts.
A debt management plan is a debt solution like this, although it still has its disadvantages. In the right circumstances, debt management can be a big help, but you`ll need to make sure it`s right for you before you go ahead.
A debt management plan involves making an agreement with your unsecured lenders for reduced debt repayments, based on what you can afford. You will still repay your debt in full, but it`ll be at a manageable pace.
Your debt management plan can last until you can afford to return to the original repayments you agreed, or until the debt has been cleared.
It`s also common for lenders to freeze or reduce interest on a debt management plan - although like the debt management plan itself, they don`t have to agree to this. Bear in mind that if they don`t, repaying a debt in smaller instalments (i.e. more slowly) will mean it costs you more in the long run as it`ll be accruing interest for longer.
A debt management plan doesn`t require you to sell your home. In fact, it should make it easier to make your mortgage payments since your payments to your unsecured lenders would be based on what`s left of your income once you`ve accounted for all your essential payments - like your mortgage.
However, there are several things you`ll need to consider before you start on a debt management plan.
If you enter into a debt management plan you won`t be making the repayments you originally agreed, and this will affect your credit rating. This could make borrowing money more difficult while it stays on your credit report.
A debt management plan will ensure that you have enough money left over for essentials, but little else.
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Tags: debt, home, debt management, mortgage, house, property
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