There are a number of debt solutions, for people with all kinds of debts. Whether your debts are still manageable or completely out of control, there is help available.
For people who simply can`t afford their debt repayments, one option is a debt management plan.
A debt management plan is an arrangement with your lenders in which you`ll ask them to let you repay your debts more slowly (i.e. in smaller monthly payments) than originally planned, based on what you can afford after you`ve paid for your mortgage/rent, utility bills and other essential costs. This may mean the debt takes longer to pay off, but you may feel it`s worth it if you just can`t keep up with your current debt repayments.
Your lenders may also agree to freeze or reduce interest and other charges on your debts, which can prevent your debt from growing, and can help you to clear your debts sooner.
It`s possible to arrange a debt management plan on your own, although this will require you to negotiate directly with your lenders, which many people find daunting and/or time-consuming. This is one reason many people prefer to arrange their debt management plan through a professional debt management company.
Debt management plans are designed to help people who can`t afford their existing debt repayments, but can afford to repay the debt over time. It`s a way of helping you ensure that you can afford your debt payments as well as your other financial commitments.
If you can afford your existing debt repayments, your lenders won`t accept a debt management plan. At the `other end of the scale`, if there`s no realistic way of repaying the debts in full, debt management won`t be right for you and you`ll need to consider an alternative debt solution, such as an IVA (Individual Voluntary Arrangement) or bankruptcy.
Also, even if you are eligible for a debt management plan, that doesn`t mean it`s necessarily the best option for you. You should always speak with an expert debt adviser about which approach is best for you before making any firm decisions.
Bear in mind that failing to keep up with your original repayment agreements will affect your credit rating for six years and can add to the overall cost of repaying your debt, since you`d be paying interest longer (although your lenders may agree to freeze interest).
If you`re considering a debt management plan - or any other debt solution - click here, or discuss your situation with one of our expert debt advisers on 0800 195 2911.
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