Having debt isn’t always a bad thing. It allows us to buy homes, cars, holidays and other luxuries. However, if you’re not careful and don’t borrow within your means this debt can turn bad and quite quickly. The bad debt can and will have an effect on your credit score which means that you may no longer be able to buy things on credit in the future. Sometimes this is the last thing on your mind and burying your head may seem like the only option you have but there are options out there and a debt management plan could help.
What Is A Debt Management Plan
A Debt Management Plan is an informal debt solution, which means it is not legally binding. A plan can be put in place when either you or a third party negotiate lower monthly repayments with your creditors. The proposed payments are based on what you can reasonably afford which is worked out using your monthly budget. As the payments are lower they are usually paid over a longer period and are often longer than the original repayment term. With a Debt Management Plan, you will repay the full value of the debt that you owe. Because you have set up a plan your creditors might agree to freeze interest and fees on your debts but this is not guaranteed. One advantage to having a plan in place is that they are flexible – if your circumstances change, the plan can be changed.
Is A Debt Management Plan Right For You
A Debt Management Plan could be a good solution for certain individuals. There is no minimum or maximum amount of debt needed before you can enter a plan but you must have a steady and stable income. If you feel that you could pay off your debts in full if you had a longer period of time to pay them and struggling to keep up with the cost of your current monthly repayments but can keep up with your priority debts (rent or mortgage, council tax, utilities) bills and can afford to make smaller payments then a debt management plan may be the right course of action for you.
The worst thing you can do is ignore your financial worries. They won’t go away but talking to friends or family or professional who deals with financial worries all the time will help take some of the stress away. Getting the correct help will get your debts back in control and help you start paying them off in a way that is affordable for you. You can get debt management help from Creditfix who will guide you through the whole process from start to finish.
*This is a collaborative post*
**This post is not written by a financial advisor – if you need help please seek help from a professional**