Anyone can arrange their own debt management plan by simply speaking to their creditors and offering a regular payment toward their debt.
A debt management plan is informal and shouldn’t be considered if the debt is going to take too long to clear or interest and charges aren’t frozen.
The consequences of entering a debt management plan are minimum in comparison to other, formal debt solutions such as a trust deed or IVA.
Cost for Debt Management Plan
A debt management plan doesn’t have to cost anything and every penny paid each month can towards clearing the debt, although some companies will charge.
There are debt management companies who will charge a fee to manage the solution from proposal to the final payment, however these should be avoided.
It’s far better a person entering a debt management plan is paying as much money to their debt as possible and non fee charge companies offer this.
Start A Debt Management Plan
There are a couple ways people can start a debt management plan but the first route they should consider is simply doing it themselves. By contacting creditors and setting up a monthly repayment plan they could save themselves a lot of time going through a debt management company.
The second route is speaking to a debt management organisation (ideally non fee charging) who will take an income and expenditure before contacting creditors with a proposal. The proposal should be realistic and allow but still clear the debt within a reasonable period of time i.e 3 – 4 years maximum.
Alternative to Debt Management Plan
If a debt management plan is set to last too long but someone is able to make a monthly contribution to their debt an IVA or protected trust deed could help. The protected trust deed is only for people living in Scotland while an IVA is for the rest of the UK.
Both debt solutions will allow people to repay a percentage of their debt over either 5 year (iva) or 4 years (protected trust deed) and anything remaining is written off.