Consumer Debtline

Consumer Debt Management

SOLUTIONS TO FINANCIAL PROBLEMS

OVERVIEW

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. There is also the Consumer Credit Couselling Service (CCCS) which offers debt management programmes and is funded by major UK creditors.

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.

ADVANTAGES AND DISADVANTAGES OF DEBT MANAGEMENT

As a solution to financial difficulties Debt Management Plans have both benefits and drawbacks :-

Advantages

• a Debt Management Plan can be an effective way to reduce your regular debt repayments
• Debt Management Plans offer a large degree of flexibility and aren't bound by strict qualifying criteria


• they can be a good solution and allow you breathing space if your financial problems are only temporary, for example 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


• the arrangement is informal and offers no legal guarantee that further interest and charges wont be added to the debt

For many people struggling with financial problems a Debt Management Plan offers the best solution. However is some cases other methods for overcoming debt may be more suitable, for example, and Individual Voluntary Arrangement or a consolidation loan. If you would like to discuss your debt problems with an experienced and impartial advisor then call us on freephone 0800 043 50 43 or alternatively complete our enquiry form.