With stricter lending conditions and banks reluctant to let us borrow money, many people are in desperate need of some debt advice that can alleviate their debt management issues.
Professional solutions
Professional debt solutions such as Individual Voluntary Arrangements
(IVAs), Debt Management Plans (DMPs) and Trust Deeds do not involve
borrowing more money and do not require you to pass a credit check.
This means that you no longer have to go further into the red each
month and can get out of debt
for good. All of these allow people who are struggling to maintain the
payments on their unsecured balances (personal loans, catalogues, store
cards and credit card debts etc) to regain control of their finances
whilst still repaying all, or a proportion, of the amount that they
owe.
Informal professional solutions (like a Debt Management Plan DMP)
work by gathering all unsecured balances into one single monthly
payment which is paid to the debt help provider thereby simplifying finances, as only one payment needs to be made each month.
The provider then distributes this payment between creditors on a pro
rata basis, so the more that a creditor is owed the more of the monthly
payment they will receive. Reputable providers will also negotiate to try and have
interest and charges reduced or frozen, which reduces the total amount
owed.
A DMP is classed as an informal
arrangement as there are no contracts involved so you have the ability
to use this solution as-and-when-required. There is also flexibility
with payments on a DMP, as the amount you pay is dependent on your
affordability you only pay how much you can realistically afford once
priority payments like your mortgage/rent, council tax, food, travel
etc have been accounted for.
More formal debt solutions, such as an IVA
or Trust Deed, also enable multiple unsecured balances to be repaid but
involve a contract. The agreement protects you from creditors changing
their payment demands or from the terms of the agreement being changed.
The insolvency practitioner can provide support and IVA advice
or guidance throughout the term of your IVA or Trust Deed. IVAs and
Trust Deeds are repaid over fixed periods of time. With an IVA this is
generally within a five year period, whereas with a Trust Deed it is
typically over three years.
One of the most appealing benefits of a more formal solution is that
they allow a proportion of the debt to be written off after the term
has been satisfied this means that any remaining unsecured debt is
written off and you can walk away debt free.
Professional debt solutions like those listed above can be used by
overstretched individuals to prevent bankruptcy and are generally
offered following some impartial advice from a reputable debt help
organisation.

Source: Daily Express (Your Money)

If youre finding it difficult to pay off your debts and you dont qualify for an IVA, a Debt Management Plan may be just the thing for you.

So what is involved in a Debt Management plan?

• By taking out a Debt Management Plan you pay back the debts you owe to your creditors in affordable, regular instalments;

• you make only one payment directly to a Debt Management Company which will then divide the payment fairly between all your creditors.

• An additional advantage of this method is that you dont have to speak to your creditors yourself to arrange the plan; the Debt Management Company does it for you.

• The main Advantage to a Debt Management plan is that it is not a legally binding agreement meaning that you can cancel the plan at any time.

• But the main Disadvantage to a Debt Management plan is that it is not a legally binding agreement meaning that your creditors can cancel the plan at any time

The other major disadvantage of a Debt management plan when compared to an IVA is that the plan will continue until your debts are cleared or until you wish to end the arrangement (for example if your income improves and you can afford to revert to the original monthly payments).

Therefore with a Debt management plan you dont have the advantage of writing off up to 75% of your total debt as you do with an IVA, but you can enter into a plan if youre debts are less than 15,000 or if you have surplus assets that prohibit you from entering into an IVA.

If you feel that Debt Management is your best option, give me a call on 0800 533 5370 now to discuss it further.