There are many people feeling the ill effects created by the problems in the financial industry. Debts are mounting and the monthly income is stretched beyond breaking point when it comes to covering the bills that need to be paid.  If this is a situation which feels all too familiar to you, then the benefits of a debt management programme can be the perfect antidote to your financial problems.

A debt management programme offers the opportunity to allow some borrowers to bring their expenditure and income back into line without taking on additional borrowing. However, it is crucial to understand that there are some potential pitfalls and that debt management may not be suitable for everyone.

Would a Debt Management Programme Suit You?

What is a Debt Management Programme?

A debt management programme is an affordable repayment plan which is set up by a debt management company. The company will help you to identify exactly how much that you can actually afford to pay each month and will then work on your behalf to pay the money to your creditors.

Because your debt management company acts as a conduit, your money goes through them to your creditors so that you will be relieved of this pressure and stress – and can relax in the knowledge that you will not need to speak to a debt collector again!

Who will be suited by a Debt Management Programme?

Depending on the debt management company in question, they may be able to facilitate a debt management programme for unsecured debts ranging from £1,000 all the way up to £50,000.

The following questions have been devised to offer guidelines regarding the suitability of an individual in respect of the need for a debt management programme.

If you find yourself answering ‘Yes’ to one of more of the questions below, then it may well be worth trying to obtain some advice from a debt management company.

  • Are you paying the minimum or less on any of your credit cards each month?
  • Do you struggle to find the money to pay your bills on time?
  • Are you paying late fees?
  • Are you using credit to live on?
  • Have you received a court summons about a debt?
  • Have you received a letter about bailiffs visiting your home?
  • Has a debt collection agency contacted you about an unpaid bill?

Will a Debt Management Programme Affect my Credit Rating?

Regardless of the debt solution, they all offer their own unique set of advantages and disadvantages and a debt management programme is no different. Whilst they can really help if you are struggling to make repayments on your debts, the flip side of this is that failing to make the original repayments will still have a negative impact on your credit rating.

As you are unable to afford your agreed repayments, you will in effect still be asking your lenders to accept an amount that is less than was originally agreed – thus ensuring that you will be effectively missing some of the payments you were supposed to make. This will be recorded on your credit history, as may the debt management plan itself.

Obviously, no-one wants to end up with a poor credit rating but if you are unable to afford to keep up with your debt repayments, it is far more important to get the assistance that you need as soon as possible as this will help to prevent unnecessary costs and potential enforcement action. After all, any debt solution which involves reducing your repayments or writing off some of your debt will have a negative effect on your credit rating.

There are a number of factors that can affect how suitable a debt management solution will be for your circumstances, so always make sure you get informed advice from an expert.

Guest Post: Amanda Gillam currently work as a blog writer for Solution Loans.