Debt Management is a process where a debt management company helps you to make your payments on your debts more affordable. The payment plan that is devised is known as a debt management plan.
If you are struggling to keep up the payments on your debts, then debt management could be the solution. There are a number of things that debt management companies will try to achieve for you. These are:
• Stopping the interest on your debts
• Reducing the amount you pay to an affordable level
• Negotiating with your creditors for you
• Carrying out reviews every 6 months
• Enabling you to make one monthly payments for all of your debts
• Dealing with your creditors so you don’t have to
Stopping the interest
A good debt management firm will get your creditors to stop charging interest on your debts. This means that it is possible that your debts will be paid off quicker however this is not always the case. If your payments are reduced drastically then it is possible that even with 0% interest your debts will take longer to pay off. However in many cases it is possible to stop the interest charged, reduce the payments, and pay off your debts in less time than under the standard terms.
Under OFT (office of fair trading) guidance, debt management companies are not allowed to guarantee that they will stop the interest. It is impossible for any company to guarantee that another company will or won’t do something, which is fairly obvious. However in the vast majority of cases interest will be stopped on a debt management plan. Also the debt management company will have experience about which creditors are most likely to not stop interest, and you will be advised of that before starting the plan.
Reducing your payments
A detailed financial review is carried out so that we understand your financial situation in depth. This includes looking at your income, expenditure, assets, and liabilities. With this information we are able to work out if debt management is right for you, and also calculate how much you really can afford to pay to your creditors.
Armed with this information we are able to negotiate with your creditors. We send them a detailed study of your financial circumstances along with other information, and we use that to negotiate a payment plan that is affordable to you whilst at the same time acceptable to them.
Negotiating with your creditors
If you have been dealing with your creditors you may feel that they often don’t seem to understand that they are not the only company that you owe money to. We make sure that all of unsecured creditors are included in your debt management plan. This means that we tell all of your creditors exactly who you owe money to, and we also propose fair payment plans to all of them. This is done by offering pro-rata payments to each creditor. So say for example you owe £5,000 to Barclaycard and £2,500 to capital one, then Barclaycard will get twice as much of your disposable income than capital one. Obviously some people owe 10 or more companies money, so this needs to be managed perfectly and calculated to the nearest penny. Of course we will work all this out for you and make sure our proposals are fair and as likely to be accepted as possible.
6 Monthly reviews
We carry out financial reviews every 6 months rather than the industry standard of every year. What this means is that every 6 months we’ll give you a quick call to go over your finances again. It is likely that something may have changed during that time. It could be that your income has gone up or that your living costs have increased. We will document all of this and send new offers to your creditors on that basis. We want to get your plans arranged, but also keep them arranged. By doing this every 6 months you and your creditors will know that the best payment amounts are being paid each month.
Make 1 monthly payment
We will simplify the payment of your debts by enabling you to make just one monthly payment of your debts to us instead of you paying all of your creditors. So we receive a payment each month from you, and then we distribute it to your creditors within 5 days (maximum) of receiving it. If you have lots of creditors this simple benefit makes payments much simpler.
This is how debt management companies deal with payments and is the industry standard. We are fully licensed by the OFT and licensed to handle payment in that way.
Dealing with your creditors
Issues can and do arise with debt management plans from time to time. On a debt management plan you can contact us at any time if you have any problems with your creditors. If you get any letters or receive any phone calls then you can give us a call, and we will call your creditors for you and resolve any issues they may have. We are only a phone call away, and we aim to deal with any problem you are having immediately. You don’t need to worry as you once did about your debts because you will know that we are a phone call away and we will always do our best to resolve any issue or problem you are having.
How do I get a debt management plan?
The first step is to get in touch with us. This debt management plans website is a sister site to our main website Money Managers. Just get in touch and will talk to you about your situation. Then we’ll carry out the financial review (it takes about 30-45 minutes) and together we can work out if debt management is the best debt solution for you. It could be that other debt options such as an IVA, debt relief order, or bankruptcy might work better for your particular circumstances. Don’t worry, we will go through them all with you and we’ll work out which is likely to be best for you.
We can be contacted on 0800 112 3771 (cheapest from a landline) or 01332 595 522 (cheapest from a mobile)