With Britain potentially facing the worst financial crisis in history, many of us are facing tough times with our money. Rising unemployment, high levels of inflation and falling disposable incomes are just some of the factors having a big impact on many people’s finances – and for people trying to keep on top of monthly debt repayments as well as their other bills, the pressure can be particularly intense.
If you’re having trouble affording your unsecured debts, a debt management plan could be the best way of sorting out the problem. This article will explain how a debt management plan could help you get back in control of your debts.
If making your monthly debt repayments in full is no longer possible, agreeing lower payments could be the answer to the problem. If you’re in this situation, you – or a professional debt management company, if you decide to work with one – could ask your lenders to accept reduced monthly payments as part of a new repayment plan.
If debt management is suitable for your situation, an expert debt adviser – such as one from Debt Advice Now – can discuss your finances with you and work out all your financial commitments, from your rent/mortgage and food to anything else you regularly spend money on. Once all your essential costs have been accounted for, you’ll know how much you’re really able to pay towards your unsecured debts every month – and see if your lenders will accept these payments.
On agreeing a debt management plan, your lenders may also agree to have interest and other charges frozen on your debts – so they won’t continue to grow as you’re repaying them. However, just as your lenders aren’t obliged to accept a new repayment plan, they don’t have to freeze interest either – and if they don’t, making smaller payments over a longer period could cost you more in total, as interest will continue to grow over that time.
As a result of making lower payments, your credit history will be affected for six years – which could mean you’ll have difficulty borrowing more money (if you want to, that is). However, on the plus side, getting professional help with your unsecured debts could stop your financial problems getting any worse, and give you a clear route to becoming debt-free.