If you are having difficulty paying your bills, debt management may be the solution. With debt management, someone else will deal with your creditors and attempt to come to some resolution so that you can pay down your debt. The person that is handling your debt management case will help you come to an informal agreement with your creditors.
Is Debt Management Right for You?
Debt management may be the right solution to your financial problems if you have unsecured debts and don’t have enough money to pay them, and if you owe money to only a couple of creditors. This may also be an option if you do not qualify for an IVA due to your debts being under a set amount of money, usually £12,000. Debt management is also a good solution if you only need a little help getting your financial problems under control, as it is a short-term solution.
There are several advantages to using a debt management company to help you get your debt under control; the main advantage is that you do not have to deal directly with your creditors, and this will help to eliminate a lot of stress. Another advantage is that you will only have one payment to make each month, as apposed to several.
In many cases a debt management company can work with your creditors so that while you are making your payments the interest and penalty fees are dropped; there is also the possibility that you can get the total amount that you owe reduced.
Some Disadvantages to Debt Management
A debt management company can be a great option if you want to eliminate your debt in an easy and convenient way, but there are some disadvantages as well. Many debt management companies will not work with you if you don’t have enough income to make a payment plan plausible; in addition, they often want you to own your own home so that it can be used to secure your debt. Another problem with debt management is that some companies may charge high fees, and it is also a possibility that they will keep your first month payment to pay those fees; this could put your accounts in arrears. In addition to this, the arrangements that the debt management company makes in your behalf are informal and carry no legal authority.
If you do choose to work with a debt management company you should be aware of the fact that they do not give out financial advice so even if you have other options that would work better for you, they may not advise you of these options.
Working with a debt management company is a personal choice, but before making that decision you should research all of your options to ensure that you are choosing the right solution for your financial problems.