Debt Management Plan
Most people experiencing financial difficulties will be aware of the informal Debt Management Plan solution because it is one of the staple debt solutions.
Introduced into the UK as a mainstream debt solution during the nineties, Debt Management Plans provide a platform to help with the repayment of overburdening unsecured debt.
Debt Management Plans offer flexible terms to people who can't afford the monthly cost of the debt repayments.
None Borrowing Option
The principle of a Debt Management Plan allows a person to reduce their debt repayments, without the need to consolidate their debt into a consolidation loan.
Instead, the Debt Management Plan replaces the monthly repayments to creditors with new reduced repayments based on affordability.
Good with short term problems
Debt Management Plans are particularly useful when dealing with short term debt problems, such as those caused by redundancy or short term illnesses.
When the financial difficulties have been overcome, normal repayments can be resumed.
Bad with long term problems
Because a Debt Management Plan is an informal solution, it doesn't carry with it any legal obligations. Consequently, creditors are at liberty to continue charging interest on the outstanding debts if they so wish, which has the affect of prolonging the repayment term of the plan.
This poses little problem for those experiencing a short term financial problem, but should be a serious consideration for those whose financial circumstances hold no expectations of improvement. For the majority of these people, entering into a Debt Management Plan will mean many years of repayments.
Credit rating problems
As with entering any debt solution, your credit rating will be severely impacted by entering a Debt Management Plan.
Because the Debt Management Plan cannot provide any legal protection from your creditors, should your creditors issue a default notice or a County Court Judgement against you, it will damage your credit rating for 6 years.
Take professional advice
It is, therefore, always advisable to have a chat with a professional debt adviser before entering a Debt Management Plan to ensure you are fully aware of the potential consequences.
For more information on Debt Management Plans read -
Professional Debt Help
The team behind IVA.info are seasoned professional debt advisers. For the past decade we've been helping people get to grips with their personal debt problems, helping them to regain control of their finances.
For most people, their journey to debt freedom starts with a chat with one of the team. The consultation is completely free, there's no obligation to take our advice and your conversation will be held in complete confidence.
If you would like to have a chat with us about your circumstances, give us a call on 0800 088 7502, alternatively, complete the form below and one of our team will call you at your preferred time.
