A debt management plan can be an effective way of making unmanageable debts manageable again. It`s an informal arrangement with your lenders in which you`ll agree to repay your debts in smaller amounts (as much as you can afford once your other priority expenses have been covered) over a longer period of time.
However, a debt management plan isn`t suitable for all debts. Before you go ahead, you should speak with a debt adviser about whether a debt management plan is suitable for your situation.
In general, the answer to this is fairly simple: a debt management plan can directly cover non-priority debts (e.g. unsecured loans, credit cards, bill arrears, etc.), but it won`t cover your priority debts (e.g. mortgage, secured loans, etc.).
In the case of secured priority debts, your terms will state that your home (or other assets, depending on what you have secured the debt against) can be repossessed and sold in the event that you can`t keep up with the repayments, so it`s very unlikely that your secured lenders would allow you to include these debts on a debt management plan.
However, it`s not quite as simple as a matter of priority vs. non-priority debts. A debt management plan can cover arrears on secured debts - as well as arrears on utility bills, tax, phone bills, etc. - and although it won`t cover secured or other priority debts directly, your monthly payments will be made to fit around these, so that you`ll be able to afford all your essential expenses.
If you`re thinking about entering into a debt management plan but don`t know if all your debts can be included, it`s important that you speak with a professional debt adviser.
For more information, click here or call 0800 195 2911.
Answer a few simple questions and we'll give you an instant recommendation on your best way out of debt.
Your privacy is important to us. All correspondence is held in the strictest of confidence and we will only request information required to find your best debt solution.Related resources:
Tags: debt, debt management, type, types of debt, debt management types of debt
Fees payable when continuing service is provided. Repaying debt over a longer period may increase the total amount to be repaid. Calls are recorded and are usually free from UK landlines. Mobile phone users may be charged and should check with their service provider.
Think Money Limited © 2010. All rights reserved. Pennington House, Carolina Way, South Langworthy Road, Salford Quays M50 2ZY. Company Reg No: 04926097. Registered in England and Wales.