Debt Management Schemes

How To Find The Right Debt Management Schemes

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About Debt Management Schemes

Go Straight To The Recommendations For:
The Best UK Debt Management Schemes
The Best US Debt Management Schemes

Or Apply For Debt Help Now Using The Form At The Bottom Of This Page

What Are Debt Management Schemes?

Debt management is a tried and tested process for dealing with large amounts of consumer debt, from credit card bills and store cards to personal loans and household bills. Debt management schemes are payment plans set up by specialist debt companies who work with your creditors to change the terms for paying back the money you owe.

When you join a debt management scheme expert negotiators will approach all of your creditors with view to getting their agreement to making changes to the arrangements for repaying your debt. By securing reductions in interest and perhaps the waiving or writing off of penalty charges or late payment fees, the amount you have to repay each month can be reduced.

When the process of doing this with each creditor is complete, you will just make a single monthly payment into the scheme and the debt management company will pass on the agreed new payment amounts to your creditors. So as well as being cheaper and simpler for you to manage, you also have the benefit of not having to deal directly with your creditors any more.

Am I Eligible For A Debt Management Scheme?

Joining debt management schemes is not simply a matter of choosing to. They only work in certain circumstances, so you need to understand the basic requirements in order to know whether you are likely to be accepted into a scheme or not. Specific requirements will vary with each debt management company, but they have certain general requirements in common.

Debt management schemes are only suitable for unsecured debts. These include the most common things like credit cards and loans, but you cannot include secured debts, such as a mortgage, in debt management schemes. These payment plans are designed for dealing with quite large debts, so most companies will also have a minimum level of debt that they will consider. As long as your debts are in the thousands rather than hundreds, you should not have a problem.

Another essential requirement for getting debt management schemes is that you have an income that allows you to afford a regular monthly payment. It should not matter what your source of income is, but it does mean that you will need to show that you have some money remaining each month after paying your essential household costs. There are other fairly standard basic requirements such as being over 18 years of age and resident in the same country as the debt company you are applying to.

How To Get A Debt Management Scheme

A very good question and one which should be taken seriously. Some debt management companies are more effective than others and, more importantly, some are more reputable than others. You need to be aware that there are quite a number of organisations that will set up a debt management scheme that results in you paying far more to them than you ought to, which means that your debts take much longer to pay off and will cost you far more than they should.

The crucial stage is when you first apply for a debt management scheme. What you must get from a company is honest advice on whether a scheme is the best option for you, or whether you would be better off doing something else. For this reason it is best to only apply to companies that you know to be well established and reputable.

There is a list of recommendations for some of the best debt management companies for the UK and the US on the main Debt Management page of this website. UK residents can also complete an online form at the bottom of this page to get expert debt advice from our main approved debt management company.

Alternatives To Debt Management Schemes

If your situation is very serious and you perhaps cannot afford the payments required on a debt management scheme, there are other schemes that may be more appropriate. In the UK there is the option of an Individual Voluntary Arrangement. This is really for people who are struggling to repay debt and possibly facing bankruptcy. Unlike a debt management scheme, it is a legally binding agreement that lasts for five years. The main advantage is that you make regular monthly payments towards your debt for the term of the IVA, and when it ends any remaining debts are written off.

Find out more about IVA debts and go to the list of IVA Suppliers

In the US the only alternative to debt management schemes is debt settlement. This again is for serious situations where you cannot afford debt management. It involves negotiators reaching agreements with your creditors to settle your debts for a fraction of the full value. This is usually done on the basis of a lump sum in exchange for writing off perhaps half of the debt.

You can find out more about this on the main Debt Settlement page of this website, which includes recommendations for some of the most reputable Debt Settlement Companies.







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