With the number of personal bankruptcies sadly soaring in the UK over the past decade, debt management has become a keyword for those in search of help. Compared to the situation ten years ago, when consumers looking for a way out only had a handful of debt management companies to choose from, today an entire industry has sprung up, offering a dizzying variety of products and services. There is absolutely nothing wrong with that: Supported by a professional debt management company, a debt management plan may not only remove the impending threat of insolvency, but put you back on the road to recovery and financial freedom again. On the other hand, finding the right debt management provider for you is essential, as only a realistic estimation of what you can afford to pay will result in a plan with a chance of being accepted by your creditors.
One should never forget after all, that a debt management plan is fundamentally an agreement between you, as a debtor, and your creditors. And unless you provide them with some very good reasons as to why they should either freeze their interests and charges, or reduce your monthly payment to them, it will prove hard to move them to agree to your proposal. This is why debt management is a difficult and complex business and why many private persons are rightfully wary of taking things into their own hands. It is also, why, in the UK today, a debt management plan is almost exclusively set up by a specialised debt management company working as a middleman between you and your creditors. Unless this middleman is a charity, you will have to pay them for their services. This may seem like a strange thing to do, when you’re already in dire straits. And yet, there are very good reasons for choosing to go with a fee-charging debt management company.
Because of their experience as well as their close personal contacts with a wide range of creditors, serious debt management companies are frequently capable of achieving your goals quicker and more efficiently than you could as an individual. They will make sure that you can still afford to pay your essential bills such as your mortgage, council tax etc. They will see to it that money will be distributed on a pro-rata basis between your creditors, ensuring that each creditor is being paid fairly, resulting in a higher probability of the plan succeeding. And they will also negotiate with your creditors and request that interest and charges on your accounts are frozen, if not reduced, based on your circumstances.
All of the different loans are then merged into a single monthly instalment, which you pay to the debt management company and which it will then pass on to you creditors. In the case of a successful debt management plan, this monthly payment will be lower and thereby affordable for you, providing you with more breathing space and a significantly reduced psychological pressure. Thus, debt management doesn’t magically wipe out your debt, but restructures it in a way that makes it possible for you to repay it – a solution that is both beneficial for you and your creditors.