Is Debt Management a good option for you?

Debt Management is where your creditors agree that you may repay your total debt in more affordable installments over an agreed period of time.

Because they are informal arrangements, there are no solicitors or Insolvency Practitioners involved. However, this informality can come at a cost as it’s possible for creditors to change their minds. Luckily this is unlikely.

When proposing debt management to your creditors you always ask them to stop the interest and charges on your debts (and they often do), however, they are not obliged to do so. You may even have a situation where some freeze interest and charges and some don't.

If you want professional help to negotiate a Debt Management Plan, and we suggest you do, you have a couple of options:

1. Paid-for debt management plans - Debt management companies arrange them and earn fees often equivalent to about 15% of the monthly repayment. It takes longer to repay your debts if you opt for a paid for debt management plan.
2. Free debt management - With free debt management plans there are no set-up or ongoing fees, 100% of your repayment goes to paying off your debt. This means you become debt free faster.

Why free debt management is best for you

If you want to become debt free you want 100% of the money you repay to go towards paying off your debts. There are lots of different ways paid-for debt management companies make their money, but you'll normally find it works out at about 15% commission. If you repaid £25,000 at £450 a month, you'd be paying £67.50 a month to the debt management company and it would take 10 months longer to repay your debt! We therefore recommend your find a debt management service that is free using our debt calculator.