One result of the credit crunch is that an ever-growing number of people are looking for help in managing their debts following changes in their or their partners' circumstances.
In line with this the options available to them have shrunk massively, with mortgage and secured loan lenders falling in number, and those that remain tightening up on their lending criteria.
People generally do not want to go to the extreme of bankruptcy, and may still regard IVAs (Individual Voluntary Arrangements) as being only a step away.
As a result more are turning to debt management companies, and entering into debt management plans.
A debt management plan is an informal arrangement with creditors, whereby you offer what you can afford each month towards your outstanding unsecured debt.
Creditors are free to accept or reject this, and also to take further action against you if they wish.
However, provided you offer a monthly amount that is acceptable to them they will often reduce or even freeze interest and charges so that your debt reduces faster.
A debt management company will work out with you what you can afford to pay each month.
They will write to your creditors and offer this.
You then send them money every month, and after deducting their fees they will distribute the remainder among your creditors.
The bit of the process that I struggle with is that at a time when you're looking for help because you can't manage your contractual payments you are paying out fees that, over the life of a plan, can amount to thousands of pounds.
Wouldn't this money be better spent on reducing debts each month so that they are paid off faster? The most effective person to manage your debts is you.
You have the greatest interest in managing events quickly and accurately.
If you knew what to do you could negotiate with your creditors yourself.
It's not a black art, and the payoff is having your debts repaid years earlier.
You also have total control, and know exactly what's going on at all times.
It's got to be worth considering before making a final decision.
In line with this the options available to them have shrunk massively, with mortgage and secured loan lenders falling in number, and those that remain tightening up on their lending criteria.
People generally do not want to go to the extreme of bankruptcy, and may still regard IVAs (Individual Voluntary Arrangements) as being only a step away.
As a result more are turning to debt management companies, and entering into debt management plans.
A debt management plan is an informal arrangement with creditors, whereby you offer what you can afford each month towards your outstanding unsecured debt.
Creditors are free to accept or reject this, and also to take further action against you if they wish.
However, provided you offer a monthly amount that is acceptable to them they will often reduce or even freeze interest and charges so that your debt reduces faster.
A debt management company will work out with you what you can afford to pay each month.
They will write to your creditors and offer this.
You then send them money every month, and after deducting their fees they will distribute the remainder among your creditors.
The bit of the process that I struggle with is that at a time when you're looking for help because you can't manage your contractual payments you are paying out fees that, over the life of a plan, can amount to thousands of pounds.
Wouldn't this money be better spent on reducing debts each month so that they are paid off faster? The most effective person to manage your debts is you.
You have the greatest interest in managing events quickly and accurately.
If you knew what to do you could negotiate with your creditors yourself.
It's not a black art, and the payoff is having your debts repaid years earlier.
You also have total control, and know exactly what's going on at all times.
It's got to be worth considering before making a final decision.
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