Financial Resource

It’s going to be a busy year in the debt management industry if the statistics are anything to go by. According to creditaction.org.uk the average debt owed by every UK adult is £29,875 (including mortgages) and this figure is an average for EVERY adult, including those who have no debt or mortgage whatsoever! Credit Action also reports that the average consumer borrowing via credit cards, motor and retail finance deals, overdrafts and loans has risen to £4,400 per average UK adult as of November 2010. Coupled with the recent squeeze on finances, the rises in VAT and other taxes and the threat of redundancies, it’s expected that the number of people contacting debt management companies for help could rocket. So, what is debt management and what do debt management companies do to help people struggling to afford their debt repayments?

Usually seen as a last resort for people who have run out of credit, debt management plans involve negotiation with lenders to reduce the monthly payments down to an affordable level as a short to medium term solution. The client would be expected to increase payments back to the agreed level as soon as he or she can afford t. Creditors receive a pro-rata distribution of the clients affordable monthly payment and most reputable debt management companies will also negotiate with lenders to freeze or reduce interest. Success in this area will mean that the debt will always be reducing, even with reduced payments, however creditors have no obligation to freeze interest and charges if a client is on a debt management plan. Also, prevention of court action by creditors cannot be guaranteed and debtors will often receive demands for payment in the form of official letters and phone calls so there are downsides as well as upsides to consider. Credit debt management companies where credits due however, as many will actively attempt to prevent any court action from creditors by developing good relationships with the lenders.

A debt management plan can be negotiated by the client themselves or a third party can be employed to handle all dealings. As people rarely have the spare time to put in the necessary work needed, using a credit debt management firm becomes a viable option, especially if they choose a company such as UK Money Solutions. The fees that UK Money Solutions charge are amongst the lowest in the UK for administering a debt management plan, and unlike many debt management companies they actively try to get people out of debt ASAP even though the payments have been reduced. A debt management plan can be put into place as soon as needed if clients have an urgent debt problem and UK Money Solutions can be contacted on their free phone number 08000 748 059.

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