When tackling debt, having complete control over what you owe is important for a variety of reasons but it’s not always easy to maintain. A debt management plan might be the solution if you’re struggling and it could help you pay off those debts at a quicker rate while keeping those stress levels down.

Taken from our downloadable eBook Improving your Financial Health: 8 Money and Credit Management Tips, our guide to Debt Management & Keeping Track of What you Owe will show you a number of great ideas for helping you to keep your finances firmly in check.

Couple discuss debt management and review expenses

Debt management

Whenever you’ve borrowed any money, it’s very important to track your credit, so you know exactly how much you still need to repay, and when you need to make the repayments. This is something you should factor into any budgets and plans you are making. This will allow you to plan ahead and avoid any further financial surprises.

If you’ve borrowed money from a variety of different lenders and are struggling to manage what you owe, then a debt management plan could make tracking your money much easier. Such a process, however, often comes with numerous questions, such as what is a debt management plan? And what are debt management plan pros and cons?

What is a debt management plan?

A debt management plan is an agreement made between both yourself and your creditors to pay off your debts at a reduced monthly repayment rate. This can be carried out either by yourself or through an authorised debt management organisation.

This plan helps to make the paying off of your debt a much more affordable and manageable process by simply turning it into a single monthly sum that is then paid to a debt management agency.

When considering a debt management plan, it should be noted that it can only be used for non-priority debts, such as the following:

  • Short-term loans
  • Bank loans
  • Credit cards
  • Overdrafts
  • Loans from family or friends

However, there are a number of debts that can’t be paid off as part of a debt management plan that include:

  • Loans that are secured against your home e.g. a mortgage or rent
  • Court fines
  • Utility bills
  • Child support and maintenance
  • Council tax
  • TV license

Debt management help

When considering debt management help, it’s always worth carrying out some key research into alternative methods of money management beforehand. As while it might seem like the answer, there are a number of debt management plan pros and cons that need to be weighed up before any decisions are made:

Debt Management Plan Pros

  • You only pay one monthly payment
  • You only pay what you can afford
  • Most debt management agencies will regularly review your repayment plan to ensure it remains an affordable option for you
  • Many creditors will stop repeatedly contacting you once registered into a debt management plan

Debt Management Plan Cons

  • Some debt management plans may charge a fee, though some agencies do offer their services free of charge
  • Your creditors do not have to agree to a debt management plan and may continue to take action against you
  • Taking out a debt management plan will have a negative effect on your credit file
  • Taking out a debt management plan will not guarantee that interest charges will stop

When struggling with debt ensuring that you keep track of all that you owe can go a long way to resolving your money issues. A debt management plan could provide the necessary help you need to begin clearing your debts and start your journey to a clearer financial future. If you want to learn more great money saving tips, then download our eBook Improving your Financial Health: 8 Money and Credit Management Tips now.

Alternatively, if you have a question and want to get in touch, you can contact Uncle Buck at info@unclebuck.co.uk

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