Debt management, as defined in the UK, is a course of action where a reduction in repayment amount and/ or interest charges is negotiated with unsecured creditors, when you are no longer able to meet your repayment requirements.

For some background, it's interesting to note that in the UK 18% of households are in arrears and are unable to pay their credit bills or make monthly payments on time. According to recent UK statistics, in the 12 months after personal debt exceeded £ 1 trillion for the first time in July 2004, total personal debt in the UK has risen to £ 1.1 trillion. This amount is equivalent to a £ 1 million increase every 4 minutes. Aside from the harsh statistics the reality of bad debt for most people is an increased level of stress, leading to ill-health, depression or mental illness or, in extreme cases, even suicide.

For many people who find themselves in a situation where they are simply no longer able to cope with their financial obligations, a debt management plan can be a solution where they can reduce their monthly repayments, avoiding bankruptcy, and providing relief from the stress of being in arrears every month. Furthermore your commitments are simplified and you will be able to deal with your creditors as a whole instead of individually.

Debtsolver offer debt management plans for individuals who are resident in the UK i.e. England, Ireland, Scotland and Wales, as well as the Channel Islands and Isle of Man. It should be stressed that debt management plans are only available on unsecured debts, and does not apply to secured loans such as mortgages, some car finance packages, Hire Purchase agreements and leases. If you fall into the latter category, we would urge you to contact us anyway, as we may be able to find an alternative solution.

Although debt management negotiations can take place informally, in the end you as the debtor would enter into a new contract with your creditors. You would need to provide evidence that any previous contractual liabilities can no longer be met. This means that the you would usually need documentary evidence of a change of financial circumstances, for example due to job loss, bereavement, ill-health or other crisis that has led to a substantial drop in salary or income.

The reduced monthly payment is shared between your creditors, who benefit because they can avoid either expensive legal proceedings or court appearances, or paying fees to debt collectors. Bankruptcy can be a costly and drawn-out process in the UK, and debt management is usually a better financial alternative for your creditors, so they will often extend favourable repayment terms to avoid this.

It's important to realise that unlike debt consolidation, debt management is not a new loan; it's a negotiated settlement with your creditors whereby you will usually make a reduced monthly payment that is shared between them. Debtsolver's personal advisors will help with the debt management process and can handle difficult negotiations on your behalf. A Summary of the Debt Management Process

Debtsolver will make a complete appraisal of your finances and any other relevant circumstances, including monthly incomings and outgoings, as well as reviewing your list of creditors. It will help if you can provide any other relevant evidence such as letters from your employer, your doctor, medical bills or any other documentary evidence of the circumstances that led to your inability to meet your debts.

We will then summarise this information to come up with a monthly payment schedule that you can reasonably afford and offer to your creditors.

We will then approach your creditors on your behalf with a debt management plan, and usually be able to negotiate a reduced monthly payment plan.

The plan will continue until your debts are cleared or until you wish to voluntarily end the arrangement. The most common reason for this being an improvement in financial circumstances enabling a client to leave the plan and revert to their original monthly payments.

Debt Management Plan Criteria:

For us to be able to negotiate a debt management plan on your behalf, you would usually meet the following criteria:

Due to an unforeseen change in circumstances, it's no longer possible for you to meet your financial obligations.

You are ready to commit to a negotiated monthly repayment that you can afford, and that your creditors are satisfied with, and in any case not less than £ 200 per month. Your total commitments should not exceed £ 10,000.

You have at least three different creditors with whom you have unsecured loans or debts.

A debt management plan can reduce your monthly outgoings, and simplify all your different repayments into one monthly lump sum, provided certain criteria are met. As well as saving you money, this can reduce the stress and anxiety of dealing with multiple creditors. For more details about a debt management plan, or for any other enquires, contact us at Debtsolver UK.

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