Benefits of Using a Debt Management Company

Written by admin on March 28th, 2011

According to one of Manchester?s leading debt management agencies, due to the current economic climate, there will be a sudden increase in debt management queries as banks begin to stop giving out financial help to their customers. Although debt management may not be the obvious solution for most people in this financial crisis, if banks stop lending, it could be the only solution.

Debt Management is just one of many ways to settle debts. It is also one of the preferred options to take. Other options include re-mortgaging, secured borrowing, debt settlements or bankruptcy in extreme cases. Bankruptcy may allow you to have a fresh start in 12 months but it will be on your credit file for 6 years and some may find it hard to find employment in certain sectors as employers have the right to know about bankruptcy. Bankruptcy is generally associated with people who have their own business. This article will be focusing on the Debt Management solution to debt problems.

Debt management can save you a lot of trouble with your debt problems. You will be able to avoid having to file for bankruptcy which can destroy your credit rating. Debt management will work with your current budget and set up a spending plan for you.

As explained by Manchester?s leading debt management agency, Debt Management is the process of reducing the number of monthly outgoings into one affordable monthly payment. It is a very easy way of cutting down on the number of bills that have to be managed.

The main process of Debt Management involves:

1. A financial assessment to determine income and expenditure including details of the amount of money owed to creditors.

2. The construction of a financial statement using the above information to determine realistically, how much money can be given to the creditors on a monthly basis.

3. The courts usually decide what the priority debts are (e.g. loss of home, essential utility or expensive property).

4. The court will also freeze the interest charges in some cases so that people don?t get into more debt due to rising interest rates.

5. An information pack is then sent to the client to highlight the main aspects of the debt management plan including new reduced monthly payments for each creditor.

6. The plan is reviewed and returned to the debt management agency.

7. The debt consultants then approach the creditors with the reduced payments.

Debt Management has many benefits in that it allows you to manage your debts more effectively cutting down the number of monthly payments you need to make. In some case, interest rates can be frozen and your assigned debt caseworker will liaise with your creditors on your behalf. Debts can usually be settled faster with a Debt Management solution and clients are advised to not go into further debt by borrowing more money.

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