Any debt solution is an important commitment, and as such you`ll want to know whether your finances are safe with the debt solution you have chosen.
All debt solutions have their downsides, but as long as you`re sure the debt solution you choose is the right one for you, then it should help you clear your debts in a way that helps you look after your finances.
Here we take a look at how a debt management plan will affect your finances, to help you decide whether it`s the right debt solution for you.
A debt management plan involves a reduction in your unsecured debt repayments to make them affordable again. You (or your debt management representative) will tell your unsecured lenders how much you can afford to pay each month, and as long as they agree to the arrangement, you`ll start making smaller monthly payments.
Many lenders will also agree to freeze or reduce your interest and other charges, which can stop your debt from growing. This enables you to repay what you owe more quickly than you could if interest was still being charged - but remember that you`ll pay more interest in total if they don`t agree to a freeze.
A debt management plan can be arranged by you alone or through a professional debt management company. There may be a fee for the service from a debt management company, but this will be taken out of (not added to) your monthly payments, and getting professional help means you won`t have to carry out negotiations with your lenders alone, which some people find difficult.
Debt management plans have helped many people over the years, but it`s not without its downsides. You will be required to pay as much as you can at all times, meaning you`ll be left with little money for non-essential things - and it`ll have an impact on your credit rating.
Debt management plans are designed for people who can`t afford their full monthly payments, but can still commit to smaller monthly payments. If you can do this, entering a debt management plan could be a good decision. It can help you clear your unsecured debts at a rate you can afford, without using the money you need for things like your mortgage/rent payments and food.
But if you do start struggling and can no longer commit to making your monthly payments, your debt management plan may have to come to an early end, in which case you`d need to look other ways of clearing your debts.
To talk to one of our expert advisers about whether a debt management plan is right for you, click here for a free call-back or contact us today on 0800 195 2911.
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