Why Should I Choose a Debt Management Plan?
Do you have several unsecured debts? Can you no longer afford your agreed monthly payments? Having debts you’ve lost control of can be a stressful and difficult situation for many people. But getting some debt advice could help you find an answer to the problem.
Debt management is designed to give struggling borrowers a way of repaying their unsecured debts at a manageable pace, with lower monthly repayments – and could go a long way to easing the stress of debt troubles.
Let’s look at just why a debt management plan could be a suitable approach for people in this situation.
1. You’ll make monthly repayments you can afford
On a debt management plan, you’ll ask your lenders to agree to new, lower monthly repayments that you can afford. These payments will be based on what you can pay towards your debts after all your essential monthly outgoings (rent/mortgage, food, utilities, Council Tax, transport, etc.) have been covered.
Your unsecured lenders are likely to agree to a debt management plan if they consider it the best way of getting back the money you owe them.
Even if a debt management plan isn’t the best way for you to deal with your debts, there are other flexible debt management solutions from Gregory Pennington that could provide a suitable alternative.
2. You may be able to freeze interest on your debts
When agreeing a debt management plan, it’s important to ask your unsecured lenders to freeze interest and charges on your debts.
If your unsecured lenders agree to freeze interest, your debts won’t continue to grow as you’re repaying them. (Just bear in mind that if your lenders don’t agree to this, making smaller repayments over a longer period will end up costing you more overall.)
3. A debt management plan is a flexible arrangement
A debt management plan offers a fair bit of flexibility. Lenders understand that your disposable income could very well go up and down, so if you experience a drop in income, they may agree to let you further reduce your monthly payments until your income rises again. Similarly, if your income increases, you may be required to make larger repayments – which should see you become free of your debts faster.
Finally, although making smaller payments will damage your credit rating, it’s likely your credit record will have already been affected, since debt management is only an option for people who can’t keep up with their agreed payments. Speak to a professional if you’re looking for debt help.