Debt Management Companies

People use debt management companies to help them deal with their creditors. The role that debt management companies play is that of mediator, writing letters to the companies you owe money to and generally liaising with them. Debt management companies act as a consultancy service, determining how much disposable income you have available, and then arranging payment plans accordingly. The benefit of using debt management companies to handle your debt is that you do not have to deal directly with your creditors. You would also be able to make all of your payments through the debt management company, so you only need to provide a lump sum that will then be distributed.

It's worth bearing in mind that this service does cost money, so you will need to factor payment into your debt (usually a one-off fee, with a small monthly fee for the duration of the debt management plan). When dealing with debt management companies, you should make sure that all the costs of their service are agreed up front. This way you can keep control of the amount that you owe. Although the payment plans put in place by debt management companies are not legally binding, they show your creditors that you are taking the situation seriously, and are taking steps to resolve it.

Find out more about Debt Management Companies today.

An Overview of Debt Management Companies

• Debt management companies exist to form a protective (although not legally-binding) barrier between you and your creditors.  If you have contacted the companies that you owe money to, and have not been able to successfully arrange a payment plan with them, or if you find it difficult managing your repayments yourself, debt management companies may be a suitable option.
• The service provided by debt management companies is not free, but if you are paying large amounts of interest on your monthly repayments, it could be cost-effective to have someone prioritising your debt for you and organising payment.
• Using debt management companies is one step before a legally-binding Individual Voluntary Agreement (IVA) or bankruptcy.  There are far fewer financial implications for entering a debt management plan, although it will still show up on your credit history report.