Manage your debt with a debt management plan

The Debt Management Plan has been introduced to the UK as a kind of informal consolidation loan, more of a consolidation handshake if you will where you are able to group your creditors and come up with a realistic sum to pay every month. This payment is then distributed to your creditors accordingly. It is a great way to set up a way to get out of your difficulties and to avoid more legally bonding agreements. You need to weigh up this option against one that could do your credit rating some serious damage and put you in a situation that restricts you, or lands you in insolvency.

Let’s have a chat with George;

George is a perfect candidate for a DMP. He lives in the heart of London and is in big trouble financially. He lost his job and he, albeit unwisely, did what most people do in a state of necessity, turned to credit to pay the costs of living. He ran up 20 thousand pounds of debt.

He then made the best move he could have possibly made. He contacted the CCCS and came in for a counseling session. After talking the problem through a four year DMP was set up and since then George has gone from four creditors to one. He sees light pouring into the tunnel and will soon be debt free.

He admits that his problems stemmed from turning to credit cards until he had maxed out and couldn’t get credit anywhere as he had become too high of a risk.He tells us that “My DMP has helped me take my power back and get a handle on my finances.”

Have a look at the Statistics – Where are the slippery slopes to Debt?

  • Unemployment 25%
  • Reduced Income 23%
  • Ignoring budgeting 10%
  • Divorce/breakup 10%
  • Illness/Incapacity 10%
  • Increased living expenses/Inflation 7%
  • Erratic Income 4%
  • Going out of Business 2%
  • Failure to save for Pension 2%
  • Unplanned pregnancy 2%

There are also come great options to look at if you find yourself in an unmanageable debt situation. You have rights and there are benefits that can be applied for to help you with your situation. Consider going online and taking the BBC Debt Test to see where your problems are and how bad the problem is. There is also the Citizens Advice website. The StepChange Debt Charity and the National Debtline can help you find solutions. Both offer online counseling and advice on what to do and where to go. Also to keep up to date on solutions and what is available out there visit the BBC news website and look at the page that deals with debt.

Don’t be an ostrich. There aren’t any solutions in the sand, believe me, I have looked…