Debt Management and Your Creditors
A debt management plan can make a big difference to your ability to repay your debts.
A debt management plan is an informal arrangement between you and your creditors which allows you to repay your debts at a more manageable pace. You can arrange a debt management plan alone, but many people prefer to use a debt management company, who can negotiate with creditors on your behalf.
As well as negotiating for lower monthly payments, your lenders may agree to a reduction or freeze in interest or other charges. This can make a big difference to the overall amount you pay, and will ensure your debts won’t grow any bigger.
Will my lenders accept a debt management plan?
The answer to that is: quite probably. It’s impossible to guarantee that all of your lenders will accept your debt management proposal, of course – but in many cases, your lenders will understand and accept that a debt management plan may be the most realistic way for them to receive all the money they are owed.
Think about it this way: if you are struggling with your debts and can see no way of repaying them in a realistic timeframe, another possible option is for your lenders to press for court action. In reality, few lenders consider this to be a desirable outcome, and the process itself is likely to cost them – so by coming to a compromise with a debt management plan, both your needs and that of your lender are arguably met more effectively.
Remember: in most cases, lenders will be understanding of your situation, and will want to reach the best resolution for everyone involved.
Is a debt management plan right for me?
As with any debt solution, it really depends on your situation. Choosing the best debt solution for your needs is important, and you should always speak to a debt advice professional before making your final decision.
Typically, a debt management plan is best for people who are struggling to meet their existing commitments, but feel they would be more comfortable repaying their debts at a slower rate over a reasonable period of time. If you simply can’t see yourself repaying all of your debts in a realistic timeframe, then an IVA (Individual Voluntary Arrangement) might be more appropriate.