Debt Management

debt problems

You might of already investigated Debt Negotiation on your own or simply resigned yourself to the fact that a solution is required now and someone must be able to help.

The good news is that in 9 out of 10 circumstances, there is someone who can help; a regulated debt management company.

What is debt management?

Debt management is simple, it what it professes to be; A debt management company will take over the servicing of your debts in return for a fee (monthly with an arrangement fee).

Now instead of having to keep up with all your repayments to numerous creditors you will now be making a single repayment to the management company who will subsequently divide this sum between your creditors. Proving to be a great weight off your mind.

The Debt management company will contact your creditors on your behalf and explain that your debts are unsupportable, in an attempt to agree a new repayment schedule that is more affordable and in line with your current financial circumstances. They will also attempt to get the interest on your debt(s) frozen so that more of your money goes towards clearing your debt rather than just keeping on top of it. In some cases, they may also be able to get previous  charges omitted from the debt reducing the total amount you owe. It all depends on how flexible your individual creditors are (do they want to see any money or are they out for blood), remember you can't get blood out of a stone!

So all-in-all it doesn't look so bad; your debts and worries will be reduced and you can look forward to a debt free future. But it isn't that simple and you need to understand the restrictions of debt management before making a commitment.

  1. Entering a debt management program will effectively involve reneging (breaking) the credit agreements you've signed with your creditors, and even though you'll be agreeing new terms, this will leave a black mark on your credit rating. But to be frank with you; if you are in need of debt management this will have little impact on your decision.

  2. Some charities will offer debt management free of charge and some private companies will charge a fee which can in some cases be a considerable one (e.g., for a debt of £15,000 a fee of £1000.00 could be applied over the course of the agreement).

  3. Beware of companies promising to solve your debt problems at the wave of a wand; they may be trying to take advantage of people when they are at their most vulnerable. So as we always say at Re Mortgage Market - Shop around to see what fees you'll be charged before signing up.

To conclude debt management: Yes debt management can offer a solution to out of control debt problems, and cut your repayments and equally relieve stress. But it has implications for your future credit score and care needs to be taken in choosing a company or organisation who you will feel happy working with.

A few wise words on Debt Management

Choices - When you keep track of your outgoing also keep track of whether those outgoings created peace of mind for you or anxiety?

Emotional resentment - Get over your negative feelings of resentment, anger, frustration, shame, guilt and sadness over money. Let these emotions be gone and move on with your life on a more positive note. It's not all about money, some say "the sum of a man is what other remember him as being and least of all what he had".

Harmony - Come to terms with your past and the results of your actions, then learn from it. You can have 10 years experience in a topic or you can have 10 times 1 years experience! Which would you rather have?

Responsibility - Realise that you are responsible for the financial decisions that you make and they carry consequences. You have to take ownership of this responsibility without blame, before you can begin to improve your situation.

These of course don't apply to everyone who reads this page but I am sure we can all take away something, If not for ourselves maybe for another.

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