The Ideal Money Debt Management Guide

Debt tends to be something that most of us live with on a day to day basis – anyone with a credit card, for example, is accustomed to the debt of an outstanding balance until at least the end of the month. The Money Charity’s statistics not long ago estimated that the average household credit card debt in the UK was £2,293.

From time to time – and for any number of reasons – debt which had been practically a normal and entirely innocuous feature of everyday life begins to spiral out of control. When debts assume those kinds of proportions not only the immediate but also the very long term health of personal finances is at risk.

That may be the time to consider the help a debt management plan may offer – because, as the Citizens’ Advice Bureau recommends, quick action is required to stop your debts getting any worse. Here is our debt management guide to make sure you’re clued up.

Who might benefit from a debt management plan?

A debt management plan may be an appropriate source of help for a wide number of individuals and from many different walks of life. Such plans might suit anyone:

  • facing the worry and panic of their debts sliding out of control;

  • who is being chased by creditors for the payment of outstanding payments;

  • who has been warned that certain utilities are about to be cut off for non-payment of bills;

  • tenants who are under threat of eviction because of rent arrears;

  • homeowners who risk defaulting on their mortgage repayments – and thus face the eventual prospect of their home being repossessed; and

  • any other situation where attempts so far have failed to bring debts under satisfactory control.

What does a debt management plan typically cover?

A debt management plan is an informal arrangement with all those to whom you may owe money that allows for reduced payments over an agreed period of time in order to help you through any current financial difficulty so that your debts might eventually be cleared.

This might sound a fairly simple and straight forward matter to arrange. In practice, however, it might prove considerably more involved. For the plan to be recognised by and found acceptable to your creditors – the acid test of an effective debt management plan after all – might take more skill and knowledge than you have yourself.

A certain amount of advice about debt management plans and how to draw them up is available from debt charities such as Step Change, but you might prefer the individually tailored approach of a professional debt management plan provider’s services.

The provider is then in a position to discuss your circumstances directly with your creditors on your behalf – saving you the necessity of dealing with them yourself – in a way designed to secure the most favourable agreement for you.

Typically, this may involve some or all of your creditors agreeing to freeze or write off a certain amount of interest and other charges – thus reducing the total amount of your debt.

The principal objective is to agree a plan for resolving your debt problems with a recognition – and hopefully a little help – from those to whom you owe the money that you are doing your best to repay it.

Is there anything I need to know?

As a condition of agreeing to your debt management plan, some creditors pay insist that the fact of the plan’s existence is noted on your credit reference file. This is likely to affect your credit rating of course and may make it more difficult for you to arrange credit in the future.

Also be wary of many debt management firms out there, as they do charge fees for their services, which is taken from your monthly payment, meaning less goes back to your creditors. Some firms will charge an industry average others will charge extortionate fees, so make sure you have a clear breakdown of what will be paid. Sometimes it's easier to make an arrangement with your creditors direct if the relationship hasn't broken down completely.


If problems with debt seem to be in danger of spiralling out of control, yet you have both the will and a reasonable chance of repaying what you owe over a slightly longer period of time, a debt management plan may give you just the breathing space you need.

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