A guide to debt management in the uk

Do you want to repay your unsecured debts but pay less each month? A debt management plan may be the appropriate solution.

It reduces monthly payments for unsecured debts so living expenses become more manageable.

This allows you to regain control over your debts, making repayment more affordable so life can get back on track.

Rather than dreaming about becoming debt-free, use a debt management plan to make this reality.

Highlights of a debt management plan and our role:

• We negotiate lower repayments with unsecured creditors
• We remove hassles of creditor negotiation from you
• We request that creditors stop interest and other charges
• Unsecured debt repayment becomes more affordable for you
• We provide personalized and dedicated assistance throughout the process

Debt Management Plan Basics

When financial difficulties prevent you from maintaining contractual payments to creditors of unsecured debt, a debt management plan makes this easier to do. Though you can arrange a debt management plan on your own, having a third party like us do it saves time and frustration. We assume the role of provider, negotiating lower monthly repayments with each of your unsecured creditors. We also use our expertise and established relationships with those creditors to encourage them to suspend interest and other charges.

The process begins with one of our representative reviewing your financial situation. By creating a budget and determining how much income remains each month, we help you determine whether a debt management plan is the best solution to your financial issues. This also makes it easier for you to control your spending. Our advice is impartial and there is never any obligation to take it. We simply provide recommendations?whether you use them is up to you.

Why Choose A Debt Management Plan?

If it has become difficult for you to manage your debts, avoid the urge to do nothing. Ignoring the situation will not make the problem go away. It will actually make it worse, especially if you begin to miss payments. Rather than allowing creditors to pressure you into paying more than you can afford, explore a debt management plan. Reducing payments to a feasible level helps rectify the financial situation rather than worsening it.

A debt management plan makes debt repayment affordable. With a third party arranging the reduced payment, you are spared the trouble. All debts will be combined into one monthly payment, making financial management easier. Taking the appropriate action to repay debts reduces the risk of becoming subject to legal action from creditors. This avoids additional damage to the credit rating, not to mention the stigma associated with these processes.

Establishing A Debt Management Plan

If you owe between ?3,000 and ?12,000 in unsecured debts like credit cards, personal loans, store cards, and bank overdrafts, you may qualify for a debt management plan. This plan is an agreement between a debtor and creditors for a revised monthly payment. This payment is based on how much you can afford to pay after accounting for essential living expenses like food and shelter. When you establish a debt management plan, you make a new commitment to repay unsecured debts in full. We ask creditors to freeze interest and other charges during the setup process and many creditors agree to this, making debt repayment more affordable.

When we help arrange debt management plans for our customers, we serve as an intermediary, handling negotiations and payments directly with creditors. This plan is voluntary and can only be used to repay debts that are not secured against property or other assets. Once a creditor agrees to the plan, it may not contact you, request payment, or take you to court as long as you adhere to the established terms and conditions.

How A Debt Management Plan Works

If your unsecured creditors agree to participate in a debt management plan, you will know your revised monthly payment for each debt. You submit to us one monthly payment that equals the monthly installment due to each creditor. We then allocate the appropriate amount to each creditor. You have only one payment to submit each month, making debt repayment more convenient for you.

As monthly payments continue, debt balances begin falling. Though you have committed to repay debts in full, you are doing it over a longer period of time, making the process more affordable. When the plan concludes, each covered debt will have been repaid in full, leaving you debt-free. By adhering to the budget established at the beginning of the process, many people are able to remain debt-free forever and even begin saving for the future.

Positives And Negatives Of A Debt Management Plan

This plan offers several advantages:

• reduced monthly payments
• a single monthly payment makes it easier to stay on track with debt repayment
• creditors may freeze interest and other charges
• creditors may not take additional collection or legal action to recoup money owed
• flexible enough to change based on your financial status
• covered unsecured debts are cleared once the plan concludes

However, it also features several drawbacks:

• not everyone qualifies
• debts may not be written off, they must be repaid in full
• creditors are not obligated to participate or freeze interest or other charges
• secured debts including the mortgage are not covered
• credit rating is affected because reduced monthly payments are recorded on credit history

Features Of A Good Debt Management Company

Put some thought into selecting a company to administer a debt management plan. Using an inexperienced organization can create more financial headaches. When selecting a provider or operator for a debt management plan look for a company that:

• is licensed through the Office of Fair Trading (OFT)
• discusses all available debt management options
• provides objective advice and does not pressure you to choose a solution
• clearly details any costs before the plan is finalized
• explains ramifications of late or missed payments
• explains plan terms and conditions before the plan begins, including amount of monthly payment and length of repayment term
• details reasons that it could stop administering the plan

Each of the factors above describes our approach to doing business. In addition to telling you when a debt management plan might be the best solution, we will tell you when it is not. This plan is not recommended if the following statements apply:

• all debts are secured by the home or another asset
• the existing repayment amounts for unsecured debts are affordable
• amount of available income is too small to establish a reasonable repayment time or permit regular repayments

If we determine that a debt management plan is not the best solution, we will provide alternatives. You can also refer to the guides on our website to explore these offerings. Rest assured that the answer to your debt issues is within reach. After learning more about your financial situation, one of our debt management experts will quickly make recommendations.

The Debt Management Plan In A Nutshell:

• A debt management plan is designed for UK resident who are unable to afford the established monthly payments for unsecured debts.
• The plan does not reduce or write off debts but enables making reduced payments each month until covered debts are repaid in full.
• This plan is an informal solution so it is not legally binding. Creditors are not obligated to agree to it and you may cancel it at any time.
• You make a single monthly payment to us and we allocate the appropriate amount to each creditor included in the plan.
• Covered creditors should cease contact and further collection actions.
• It takes longer to pay off debts because monthly payments are reduced. If the debt management company takes a portion of payments for its services, the repayment period is further extended.

Think about your financial situation and decide whether a debt management plan is the best solution. If you are unsure, contact us for guidance. If this plan is the best solution, we take the lead in negotiating with creditors and setting up the framework. You deal directly with us, letting us interact with your creditors. If your financial situation improves or worsens, we will help adjust the debt management plan accordingly.

Our experts make debt management as painless as possible. They make no judgments, only offer advice and solutions. While the plan is in effect, they stay in contact to provide updates and answer questions that may arise. At all times, you will know exactly where you stand financially with each covered creditor, providing peace of mind until debts are repaid.

The best time to take control of debt is before it becomes unmanageable. A debt management plan is one way to handle debts that have become unaffordable, before things reach crisis stage. Taking action today can prevent many headaches in the future. Creditors will stop their relentless efforts to obtain payment and you will be on the road to becoming debt-free.

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