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Debt Management a helping hand?

Updated on February 2, 2013

Debt Management what is it?

Well the answer I came across most by researching the topic is " A debt management plan is designed to help you make affordable and sustainable repayments each month to your creditors, It is considered by some a more sensible alternative to consolidation loans or IVA's". A debt management company may be of use and interest to you if (A) you are unable to afford your current monthly repayments, (B) Are you finding it impossible to refinance your existing debts into a single monthly payment, or (C) You want to avoid the severity of an IVA or a personal bankruptcy order. If any of those three apply then a Debt management company could really help you to alleviate the financial strain and burden.

debt management companies
debt management companies

Why choose Debt management companies?

Trying to get all your creditors to agree to reduced payments can be very hard work, especially when their collection departments can sometimes be cold and unhelpful. Usually with debt management companies, you will be allocated a debt manager who will do the following for you..

  • Go through your individual finances with you.
  • Prepare a Financial Statement and Budget tailored to your own circumstances.
  • Agree an affordable monthly payment with you.
  • Negotiate on your behalf with your creditors- no more hassle for you
  • They will help stop the debt phone calls that hassle you.
  • They will distribute 100% of your payment to your creditors.

With all good and reputable debt management companies they guarantee 100% of your monthly payment goes towards reducing your overall debts. So they don't take a slice of the financial pie.

Arranging a Debt Management Plan

A full assessment of your financial situation is carried out. To do this, they will need to know your regular income and expenditure, who you owe money to (your creditors) and any other relevant information about your personal circumstances. By collating this information into a Financial Statement, they are then able to determine how much you can realistically afford to offer each of your creditors.Your creditors will then be approached and asked to accept the reduced payments. In most cases creditors are happy to agree the plans that they initiate because they know, from experience, that such plans are realistic and sustainable.You then make a single monthly payment, all of which is distributed by the company to your creditors. Every penny of your monthly payment goes to reducing your debts.

Throughout the duration of your plan, you will have usually have an assigned case officer whom you can contact should you experience any difficulties whilst the arrangement is in place. Your plan will be reviewed at regular intervals to ensure that it still meets your circumstances. The plan will continue until your debts are cleared or until you wish to voluntarily end the arrangement. Happily the most common reason for this, is due to the client experiencing an improvement in income enabling the client to leave the plan and revert to their original monthly payments.

Debt Help -The Cheaper option

Most legitimate Debt management services are funded in part through sponsorship and donations and by working with other agencies to ensure the service remains free at all times. A lot of donations come directly and indirectly from those parts of the credit industry who believe that everyone should have access to free and impartial debt advice.Usually everyone who provides advice is a volunteer. As most companies that offer advice are run charitable there are no company cars, pension plans or business trips to fund. And by offering an indirect service (. by phone, post and email) they keep their overheads to an absolute minimum.

Remember most Debt management companies do not charge you for the service. Hope this helps you out in some way.


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