Consumer Debt Counselling

Consumer Debt Management

Free impartial assistance with financial problems

What is Debt Management?

A Debt Management Plan is an informal arrangement made between yourself and your creditors to reduce the amount of your debt repayments. You can attempt to negotiate a plan yourself or alternatively there are a wide range of companies and organisations that offer Debt Management services. These organisations include the Citizens Advice Bureau and the National Debtline who both provide general support for consumers looking to sort out their own debt problems.

Additionally there are many commercial debt management companies operating in the UK. These companies often charge a fee for their services. The size of these fees can vary greatly, for example, some companies charge up to £1000 to set up the arrangement while other companies will charge very little. With this is mind you consider very carefully and where possible seek a second opinion before you commit to any kind of debt management plan.

Debt Management – Benefits and Drawbacks

As a solution to financial difficulties Debt Management Plans have both advantages and disadvantages –

Advantages

A Debt Management Plan can be an effective way to reduce your regular debt repayments. One of the major advantages of Debt Management Plans is that they offer a large degree of flexibility and aren't bound by strict qualifying criteria. They are therefore suitable for a wide range of circumstances. For example, they can be a good solution and allow you breathing space if your financial problems are only temporary, i.e. to cover a short period of unemployment.

Disadvantages

There is no restriction upon who can set up a debt management company in the UK or the amount of fees which can be charged. Any fees charged by the debt management company will be added to your existing debts increasing the debt repayment period. Also the arrangement is informal and offers no legal guarantee that further interest and charges wont be added to the debt.

It is often the case that a Debt Management Plan is the most suitable solution to a persons debt problems. However if you have debts in excess of £15,000 then an Individual Voluntary Arrangement may be more suitable.