If you're unable to keep repaying your debt at its current level, then the best thing to do is to get in touch with a company that offers free debt advice. One of the options they will probably tell you about are debt management plans.
What is a Debt Management Plan?
While the problem with the way that a lot of things are named is that it is too specific so that you have to know what it is before the title makes sense, the opposite problem is in operation here. It sounds like something very general but is actually quite specific. A debt management plan describes an informal arrangement whereby you pay a reduced amount to your creditors through a third party.
Even though this is an entirely informal arrangement which you enter in to with your creditors, they usually do not arbitrarily bring it to an end, although they can. So as long as you keep up with your payments, it should work fine.
How it works is that you tell a third party, usually a debt management company, how much you can afford to pay each month towards your debt. They take this sum to your creditors and try to get them to accept. And although they don't have to, usually they will as if they took legal action that is what they would end up with anyway.
What has been mentioned yet, but it is important to note, is that this only applies to your unsecured debt. It could be attempted with a secured loan as well, but they are less likely to accept as they already have the recourse open to them of taking possession of your home if you don't pay them.
Lenders of unsecured debt do not have that option of course, to lay claim to your property if you do not pay them. That doesn't mean that you can simply decide to stop paying though as they can take legal action, and if you don't pay what the court tells you you have to then they may be able to take your property.
The Alternatives
There are a number of different ways that you can deal with a debt problem of course, a debt management plan being just one of them. When you get in touch with a company for debt advice, they will be able to tell you about a number of other ones as well.
An option that is quite similar to a debt management plan is an IVA. This is a formal procedure, but you still only have to pay what you can afford each month, and its distributed for you by a third party. One of the main differences is that after 5 years of making these payments, the rest of your debt is written off.
Of course the one that most people are familiar with is bankruptcy. Jumping straight to bankruptcy when you are having debt problems though is a bad idea. It should only rally be treated as a last resort.
A few of the many issues to do with bankruptcy are that it is expensive, you could lose your property and you may lose your job as a result of it. You'll only lose your job if you are something like a company director, or you are handling finances as a large part of it. Just the expense alone puts many people off though, it costs over 700.
If you cannot afford to make payments on your unsecured debt anymore and you don't own your own home, then one of the best pieces of debt advice is to apply for a debt relief order. With one of these, your debt is immediately frozen and you don't have to make any more payments on it for a year. If you still can't afford to make payments after a year, it is written off altogether.
What is a Debt Management Plan?
While the problem with the way that a lot of things are named is that it is too specific so that you have to know what it is before the title makes sense, the opposite problem is in operation here. It sounds like something very general but is actually quite specific. A debt management plan describes an informal arrangement whereby you pay a reduced amount to your creditors through a third party.
Even though this is an entirely informal arrangement which you enter in to with your creditors, they usually do not arbitrarily bring it to an end, although they can. So as long as you keep up with your payments, it should work fine.
How it works is that you tell a third party, usually a debt management company, how much you can afford to pay each month towards your debt. They take this sum to your creditors and try to get them to accept. And although they don't have to, usually they will as if they took legal action that is what they would end up with anyway.
What has been mentioned yet, but it is important to note, is that this only applies to your unsecured debt. It could be attempted with a secured loan as well, but they are less likely to accept as they already have the recourse open to them of taking possession of your home if you don't pay them.
Lenders of unsecured debt do not have that option of course, to lay claim to your property if you do not pay them. That doesn't mean that you can simply decide to stop paying though as they can take legal action, and if you don't pay what the court tells you you have to then they may be able to take your property.
The Alternatives
There are a number of different ways that you can deal with a debt problem of course, a debt management plan being just one of them. When you get in touch with a company for debt advice, they will be able to tell you about a number of other ones as well.
An option that is quite similar to a debt management plan is an IVA. This is a formal procedure, but you still only have to pay what you can afford each month, and its distributed for you by a third party. One of the main differences is that after 5 years of making these payments, the rest of your debt is written off.
Of course the one that most people are familiar with is bankruptcy. Jumping straight to bankruptcy when you are having debt problems though is a bad idea. It should only rally be treated as a last resort.
A few of the many issues to do with bankruptcy are that it is expensive, you could lose your property and you may lose your job as a result of it. You'll only lose your job if you are something like a company director, or you are handling finances as a large part of it. Just the expense alone puts many people off though, it costs over 700.
If you cannot afford to make payments on your unsecured debt anymore and you don't own your own home, then one of the best pieces of debt advice is to apply for a debt relief order. With one of these, your debt is immediately frozen and you don't have to make any more payments on it for a year. If you still can't afford to make payments after a year, it is written off altogether.
About the Author:
Connor Phillips is very knowledgeable in all different financial matters. He can be found writing regularly at http://www.debtadvice.net where you can discover much more regarding advice on debt.
There is addition advantage accessible for humans alms a alleyway out of debt.That's give a good solution of debt management.
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