For individuals who find themselves with an unmanageable debt problems a debt management plan may be a possible solution.
The debt management plan is an arrangement between you and your creditors, but managed by a third party, in which you agree to repay your debts at a rate you can afford. Debt management plans can be an effective way of relieving pressure on your financial situation allowing you to repay debts as quickly as possible without requiring the borrowing of more money.
With the debt management plan there is only one payment to make each month to the debt management organisation who then distribute the money between the creditors. Interest and additional charges are often stopped when a debt management plan is conducted taking even more pressure off the situation.
The disadvantages of the this type of consolidation loan are that although you’ll find your payments more manageable, you may end up paying more in the long run as your debts will invariably take longer to pay off. Before agreeing to such a plan make sure you work out the total cost of repayments instead of merely looking at the attractive new monthly payment.
Be extremely careful that you set up a debt management program with a reputable company, and don’t let anyone talk you into borrowing even more money on top of your current debts. This will obviously only make matters worse.
For free, independent and impartial debt management advice in the UK contact The Citizens Advice Bureau.
Related posts: