Debt Management Plans - Advantages and Disadvantages
Debt Management Plans have both advantages and disadvantages, as is the case with any legal or financial arrangement.
We always suggest our visitors compare debt management companies through our free debt calculator. Our companies have advisors on hand to help with you with the right debt solution.
Debt Management Plan Advantages
Protection from Creditors
Once agreed a debt management plan means that you do not have to directly talk to your creditors. However, this will only be once the plan has been accepted.
Contact and Support from Debt Management Company
If you use a debt management company they will support you through the life of the plan, with instant telephone support.
Single Payment
With only one payment to make, your debts are paid from this payment to the various creditors. this makes it easier to manage your money yourself.
Freeze Interest and Charges
As long as the plan is successfully accepted and completed then charges and interest on your debts is usually frozen, reducing your overall debt level.
Debt Management Plan Disadvantages
Credit Rating
As with any type of debt management a debt management plan could negatively affect your credit rating.
Deposit
Typically there is a deposit at the start of the plan that is payable to the debt management company. This is required for administration costs for setting up the plan, so this will not go towards actually paying back your debts.
Not all Debts are Covered
Not all types of debts are covered, please see debt management plans - do I qualify? for more information.
If you are unsure as to whether you are suitable for a debt management plan, then we would recommend that you compare our debt management companies, contact them and see what advice they can provide.
