The good stuff - the pros about Debt Management Plans
You have a date for when you will be debt-free
Debt is a heavy burden to bear and under normal circumstances it will feel it dragging you down for years with no end in sight. A Debt Management Plan will tell you straight away the date when you will be debt free.
You have some protection from creditors
A Debt Management Company can deal with your creditors for you, eliminating the stress and unpleasantness that they can often create. Once your Debt Management Plan is up and running you do not need to worry about doorstep collectors turning up unexpectedly or jump every time the phone rings.
Your debt interest and charges can be frozen
Creditors are generally fine about freezing interest and charges on your debt when you want to set up a Debt Management Plan because you’re showing your commitment to paying them back. Good creditors understand that the best opportunity you have to paying your debt off is to meet you halfway and make small allowances where they can.
Affordable monthly payments
With a Debt Management Plan, you’ll never have to make the decision between paying a debt or go food shopping again. Your monthly payment is based on your surplus income after you have paid your living expenses.
You can protect your career or business
Unlike debt solutions such as Trust Deeds and IVAs, a Debt Management Plan doesn’t man you have to declare yourself insolvent and risk your job or business if you are in a position of fiscal responsibility
You’ll learn about financial management
A Debt Management Plan can help you get to grips with any poor financial habits you may have, especially if have always had a tendency to over-spend, so you can build a solid financial future for yourself after your debts are paid off.
Your confidence and self-esteem will increase
Debt can emotionally batter you and impact badly on your self-esteem and confidence. A Debt Management Plan can help build you back up again and give you a sense of control over the finances and your future.
Now the cons of a Debt Management Plan
Only unsecured debts can be included
If you have secured debts, such as loans against your property or you have taken out hire purchase agreements for a car or domestic white goods, you cannot include these in your Debt Management Plan. Only unsecured debts such balances on credit cards and store cards, can be included.
You may have to pay charges
Because you are using a Debt Management Company you may have to a fee for their services as they deal with your creditors on a day-to-day basis, take care of the paperwork and distribute your payment every month.
Your credit rating will be affected
Unfortunately your credit rating will be affected by a Debt Management Plan, but there is a very good chance it has been already. By the time you started researching Debt Management solutions you will probably have already begun to have credit issues. Perhaps you can no longer get credit or you may have bounced a cheque or a direct debit. You may even have been late with a payment or have mortgage arrears. However, left to continue along the same path, other more serious issues could arise, like insolvency or bankruptcy, which will have a far greater impact on your credit rating.
Sometimes you may not be protected from action by your creditors
With many retail stores offering ‘buy now, pay later deals’, it is not uncommon to forget about something you have bought on credit terms some time before. However, as all of your surplus income is already being divided between your existing creditors, you may have to agree a new Debt Management Plan that includes your new creditor, which may cause problems with your old creditors as you will be trying to pay them less.
If you know you want to pay back all of your debt and think a Debt Management Plan might be the right option for you, call 0800 043 2027 today and speak to a qualified expert who can discuss your options with you in confidence.