Debt Management Plans
What is a Debt Management Plan?
A debt management plan could provide an efficient way for you to deal with your finances and repay your debts at a rate you can afford. Here are 5 of the main pros and cons of debt management;
What are the Pros and Cons of a Debt Management Plan (DMP)? Debt Management Plans – DMPs Pros and Cons:
Debt Management Pros
- Debt management could see your interest and charges being frozen by your creditors
- Reduced monthly payments on debt management plans
- Debt management can provide relief from unmanageable debt levels and stress
- Debt Management demonstrates your willingness to tackle your debts
- Debt management won't hurt your credit rating as much as otherdebt solutions like IVAs and bankruptcy
Debt Management Cons
- Debt management is not a legally binding agreement unlike an IVA
- Your creditors are under no obligation to agree to freeze interest and charges
- It will take you longer to pay your debts whilst on debt management
- Your credit rating will be affected
- Your creditors are free to raise legal proceedings against you at any time to recoup the money you owe them
A debt management plan can provide you with some breathing space if your debt repayments have become overwhelming and you need time to sort out your financial situation.
The amount you pay to your debt management company every month will be calculated by looking at your overall income and expenditure. Your payments will be distributed amongst your creditors which mean that the pressure of phone calls chasing you for money will ease off and let you concentrate on getting your finances back on track.
In order to qualify for a debt management plan your debt should be at least £1,500. This should be between more than two creditors. It’s essential that you’ve got a regular income from which to meet your monthly repayments to your debt management company for them to then share amongst your creditors.
Useful Links
Debt Management Plans
Debt Management - Pros & Cons
Debt Management - Criteria
Debt Management - Steps
Debt Management - Overview
Debt Management Vs Consolidation
Debt Management Vs IVAs
Debt Management Vs Bankruptcy
Debt Managament - FAQs
Debt Management - Glossary
