A guide to Debt

DEBT MANAGEMENT

You can use a debt management company (DMC) to help you deal with your debts.

This simply means that a company will contact all your creditors and arrange a suitable amount of money for you to pay towards each of your debts. They can also arrange to have your interest rates and charges frozen, so that all you pay is the initial sum you took out in the first place.

Benefits of a debt management plan are that you will have one lower monthly payment, which you can afford, to pay to your debt management company, who will then distribute the money to the companies you owe money to. This is easier to manage and, you’ll have money left over to enjoy doing things that you weren’t able to do before.

Before a debt Management Company will consider accepting you they will look at the amount of debt you have accrued in total. This excludes all secured debt including mortgages and secured car finance. Then, they will look at how much disposable income you have left after all your priority bills and day to day expenses are taken in to account. Whatever you have left will go towards paying off your unsecured debts.

Disadvantages of using a debt management company are that it is not legally binding so, if they want, your creditors can continue to chase you for outstanding payments.

To apply for a debt management plan you must shop around.
Some companies charge high fees and this can leave you less money to pay towards your debts.