What is debt management?
Debt management is a way of dealing with your unaffordable debts by restructuring the payments in order to make them more accessible in terms of budget. This is an informal agreement with your creditors for which you have to bring proof of your inability to make required payments. If the creditors agree to accept amended terms, your monthly payments will be calculated in terms of affordability by referring to your surplus income only. That is, whatever is left from your monthly income after the value of your essential expenses are deducted. There is a fair chance that your creditors will agree to freeze interest and charges as well, in order to make the debt more easy to repay.
The aim of a debt management plan is, after all, to enable you to pay back what you owe without significantly affecting your lifestyle. Although smaller payments mean an extension of the repayment period, debt management might be the safest and most comfortable way of dealing with your debts without having to face unpleasant situations like calls from the creditors or court action.
Although Debt Management is the most popular way of dealing with unaffordable debt, it might not suit everyone’s situation. However, there are some alternatives to Debt Management that are most likely to provide a way out of debt regardless of the owed amount or the restrictions of your financial circumstances.
If you are unable to repay your debt within a reasonable amount of time, whether it’s because of the amount or due to low income, you could apply for an IVA or Trust Deed (if you are a Scottish resident). In this way, you will only have to pay at an affordable rate for a few years, following which, you become debt free.
If everything else fails and you’re considering a fresh financial start, you could apply for a Bankruptcy order.
If you are afraid to reveal your struggling and take a first step towards helping yourself out of debt, remember that you are not alone. Debt solutions are just a responsible way of dealing with your debts and getting back in control.