When individuals get in debt and call the Assist With Debt helpline, the question most asked of the advisors is how do I get out of this mess. We are a national agency but based in the Midlands and so ideally placed for those who live in Birmingham, Coventry and Stoke. We are able to explain a host of suggestions and solutions, but the three most well-liked are bankruptcy, the IVA and debt management.
In the first two articles in this series I explained by way of questions and answers, the main concerns raised by our callers. Here I will now deal with those relating to debt management.
What is a debt management strategy?
In short a debt management program is an informal arrangement by which a person in debt agrees to make payments to his creditors out of his disposable income. The payment is sent in one sum to a debt management business who distribute it across all the advised creditors according to how much each is owed.
The debt management business negotiate an appropriate settlement program on behalf of each and every debtor that suits their capacity to pay. They should attempt to quit any charges and interest from accruing whilst payments are being produced, so that the actual debt itself is becoming repaid.
How does debt management impact my credit rating?
If you are already in default on your accounts it is likely that your credit rating has already been affected. If you cannot meet your contractual terms, then your credit rating will be affected. It will remain on your credit file for six years.
How is a debt management plan implemented?
The debt management organization will conduct a short interview during which they will ascertain your income and expenditure and for that reason what you can afford as a monthly payment towards your debts. This offer is then put to your creditors, and if accepted, your payments will be collected by the debt management company and soon after charges, distributed pari passu, ie equally according to the level of debt owed.
Will I be credit checked?
There is no lending involved here and so no credit checking takes location.
Will I still be harassed by debt collectors?
At the start of the plan you could encounter some calls from debt collectors, this is simply because your plan is informal and it will take time for some departments to take notice that standard payments are becoming received.
Does a debt management program cover all my debts?
It will only cover your unsecured debts. You can leave out some debts, but those not covered can be pursued by all and any means.
Is my house at risk?
As your mortgage is not covered by these payments, you need to make positive that you pay that in full every single month. Your income and expenditure will have taken into account your mortgage commitment and so you should have income offered for the mortgage.
Can I alter payments?
If your circumstances change, you can amend your payments accordingly. The key point is that you continue to pay what you can afford each and every month.
How can payments be produced?
These can be produced weekly or monthly by cheque or standing order. You should attempt to ensure that you are not taking on much more credit to settle these debts.
If you are in debt and you believe that a debt management strategy may assist you, you ought to call a support with debt helpline advisor free on 0808 160 5577 now.