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Advantages of debt management plans
Advantages of debt management plans
- Allows you to bring income and expenditure back into line without taking on more borrowing;
- You can follow this option by yourself or with the help of a no fee charging debt advice agency.
Disadvantages of debt management plans
- There is no guarantee that your creditors will accept the reduced payments and/or freeze future interest payments;
- The time taken to repay your debt will increase. The time will further increase if you pay your debts through a fee-charging debt management company;
- Your credit reference file will show details of the Debt Management Plan. This will affect your ability to get credit in the future.
Debt management plans can be a good option if:
- Your financial problems are caused by a temporary reduction in income and the situation will improve in the near future.
Debt management plans can be unhelpful if:
- Your ability to pay your debts will not improve within 12 months.
Debt management plans can be disastrous if:
- The fees taken by commercial debt management companies and the refusal of banks and credit card companies to freeze interest means that your debt steadily increases.
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