Debt management - A debt management plan could be your solution

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Choosing A Debt Settlement Company
We all want more for less, bargain has been our innate human quality. We regularly get pop ups, mails, recorded messages, and more from several debt reduction companies. Some of us are drawn in like a moth to a flame at the promise of getting anything for 50% reduction of debt or total debt settlement within one year, or so. Some simply skip through them. There is less harm being moved away by the... Read debt consolidation article



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Debt consolidation mortgage loans can help you lower your interest rates and monthly payments. With reduced rates, you can also pay off your debt sooner. However, reducing your equity could subject you to private mortgage rates. You may also end up spending more on interest payments by delaying payments. Saving With Mortgage Interest Rates Mortgage interest rates are much low... Read debt consolidation article



Debt management - A debt management plan could be your solution
Debt management, as defined in the UK, is a course of action where a reduction in repayment amount and/ or interest charges is negotiated with unsecured creditors, when you are no longer able to meet your repayment requirements.

For some background, it's interesting to note that in the UK 18% of households are in arrears and are unable to pay their credit bills or make monthly payments on time. According to recent UK statistics, in the 12 months after personal debt exceeded £ 1 trillion for the first time in July 2004, total personal debt in the UK has risen to £ 1.1 trillion. This amount is equivalent to a £ 1 million increase every 4 minutes. Aside from the harsh statistics the reality of bad debt for most people is an increased level of stress, leading to ill-health, depression or mental illness or, in extreme cases, even suicide.

For many people who find themselves in a situation where they are simply no longer able to cope with their financial obligations, a debt management plan can be a solution where they can reduce their monthly repayments, avoiding bankruptcy, and providing relief from the stress of being in arrears every month. Furthermore your commitments are simplified and you will be able to deal with your creditors as a whole instead of individually.

Debtsolver offer debt management plans for individuals who are resident in the UK i.e. England, Ireland, Scotland and Wales, as well as the Channel Islands and Isle of Man. It should be stressed that debt management plans are only available on unsecured debts, and does not apply to secured loans such as mortgages, some car finance packages, Hire Purchase agreements and leases. If you fall into the latter category, we would urge you to contact us anyway, as we may be able to find an alternative solution.

Although debt management negotiations can take place informally, in the end you as the debtor would enter into a new contract with your creditors. You would need to provide evidence that any previous contractual liabilities can no longer be met. This means that the you would usually need documentary evidence of a change of financial circumstances, for example due to job loss, bereavement, ill-health or other crisis that has led to a substantial drop in salary or income.

The reduced monthly payment is shared between your creditors, who benefit because they can avoid either expensive legal proceedings or court appearances, or paying fees to debt collectors. Bankruptcy can be a costly and drawn-out process in the UK, and debt management is usually a better financial alternative for your creditors, so they will often extend favourable repayment terms to avoid this.

It's important to realise that unlike debt consolidation, debt management is not a new loan; it's a negotiated settlement with your creditors whereby you will usually make a reduced monthly payment that is shared between them. Debtsolver's personal advisors will help with the debt management process and can handle difficult negotiations on your behalf. A Summary of the Debt Management Process

Debtsolver will make a complete appraisal of your finances and any other relevant circumstances, including monthly incomings and outgoings, as well as reviewing your list of creditors. It will help if you can provide any other relevant evidence such as letters from your employer, your doctor, medical bills or any other documentary evidence of the circumstances that led to your inability to meet your debts.

We will then summarise this information to come up with a monthly payment schedule that you can reasonably afford and offer to your creditors.

We will then approach your creditors on your behalf with a debt management plan, and usually be able to negotiate a reduced monthly payment plan.

The plan will continue until your debts are cleared or until you wish to voluntarily end the arrangement. The most common reason for this being an improvement in financial circumstances enabling a client to leave the plan and revert to their original monthly payments.

Debt Management Plan Criteria:

For us to be able to negotiate a debt management plan on your behalf, you would usually meet the following criteria:

Due to an unforeseen change in circumstances, it's no longer possible for you to meet your financial obligations.

You are ready to commit to a negotiated monthly repayment that you can afford, and that your creditors are satisfied with, and in any case not less than £ 200 per month. Your total commitments should not exceed £ 10,000.

You have at least three different creditors with whom you have unsecured loans or debts.

A debt management plan can reduce your monthly outgoings, and simplify all your different repayments into one monthly lump sum, provided certain criteria are met. As well as saving you money, this can reduce the stress and anxiety of dealing with multiple creditors. For more details about a debt management plan, or for any other enquires, contact us at Debtsolver UK.

Debtsolver is a UK company providing resources and information on Debt Management UK, Debt Consolidation UK, Debt Problems UK and IVA & Debt Advice

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Debt consolidation and how it works

Debt consolidation in the UK is the process where a debtor takes out a single loan to pay off other existing loans. This can be done to secure a lower interest rate, and hence make lower monthly repayments, or to just to simplify your repayment plans. Unlike debt management, where your previous debts are not cleared, a debt consolidation loan clears old previous debts, once and for all.

Debt consolidation takes a number of forms; either as the conversion of multiple unsecured loans into a new, unsecured loan, or debts can be consolidated into a secured loan against an asset, most often a property, which be used as collateral. Because a secured loan offers less risk to the creditor, the interest rate can be lower, and hence a consolidated loan can be cheaper. The risk to you the debtor is that you could lose your home if you fail to keep up repayments.

For most people in the UK, debt consolidation offers advantages to people with high levels of credit card debt because at the present time credit card interest rates in the UK are generally higher than those offered by the banks. Other groups that would benefit from debt consolidation are individuals with high levels of debt against high street store cards, of which there have been some 14 million issued in the UK, with an average APR of about 30%. In a recent report by the UK Competition Commission ("Store Card Credit Services", September 2005), it was claimed that many shoppers were paying inflated interest rates on their chargecards and being overcharged by £ 100 million each year.

Clearly, for many people there can be benefits to simplifying your credit commitments and consolidating them into one existing loan, thus potentially:

Reducing financial commitments

Reducing the risk of paying fees due to late payments to one or more of your creditors

Alleviating the stress in having to deal with multiple creditors each month

How Debt Consolidation Works:

Debt consolidation allows you to make a clean start, converting your existing commitments into a single loan payment. Debtsolver will review your financial circumstances to make sure that a consolidation loan is the best option for you. You should note that a consolidation loan would usually be secured against your home, which would be at risk. Hence, debt consolidation may not be available if your financial difficulties are so severe that your credit rating is adversely affected, and if your debt commitments are very high. Under such circumstances an IVA or bankruptcy procedure through the UK courts may be the most suitable choice for you.

If a debt consolidation plan is the best option for you, your old loans will be paid off and replaced with a new one on more favourable terms, and your previous credit rating should be kept intact. You will then have a new loan with a single monthly payment.

If you still have any questions about a debt consolidation plan, you can have a look at our debt FAQ page, or you can call us. For a non-obligatory review of your finances you can fill out our debt problems application form or call us directly at the number listed. All information collected during the procedure is entirely confidential. It's important to us that you aren't kept waiting, and you will hear from us within 24 hours. Should you decide to use our services, in most cases the necessary work can be done over the telephone. However, if this is not possible or you would prefer to meet in person, we can arrange for one of our Senior Advisors to meet with you. Debtsolver operate a National service and have offices throughout the UK.

Debtsolver is a UK company providing resources and information on Debt Management UK, Debt Consolidation UK, Debt Problems UK and IVA & Debt Advice


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Debt management - A debt management plan could be your solution
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