We have helpful finance management advice on debt, loans and credit cards

A debt management plan is an informal agreement between you and your debtors, which is handled by a professional debt management agency. This company calculate the money you can afford to pay so that you repay debts at a rate you can afford, with a single lump sum payment made to the agent who will distribute this money to your creditors. This removes the stress and strain of the debt process.

Below is a series of questions and answers which you may find useful, if you are considering a debt management plan.

Will I have to live on a tight budget during my debt management plan?

To enter into and maintain a plan that will successfully help you out of debt, it is necessary to live within a budget. This budget, however, is discussed with you at the outset of the plan. You are required to submit all information regarding your income and expenditure to your creditors. It is in your interest when negotiating a debt management plan with your creditors to show them that you are prepared to make concessions in order to ensure the success of the plan.

Why do I have to open a new bank account?

If you have a current account with one of your debtors, it is necessary to open a new bank account. Banks use the ‘right to offset’ which uses money from your bank account to pay another debt with the bank. It is therefore in your interests to open another bank account and prevent this.

Can my creditors issue a county court judgement (CCJ)?

A debt management plan is an informal agreement between you and your debtors which means that they can theoretically issue a CCJ despite the arrangement. Professional debt management agencies, however, have years of experience dealing with creditors and often negotiations are successful in avoiding CCJs. If a debtor was to pursue a CCJ the payments you would be legally required to pay would remain very similar to those of the debt management plan, making it an unnecessary venture.

Can I get into a debt management plan if I already have a CCJ?

It is still possible to enter into a debt management plan if you have a CCJ. You will be required to include CCJ payments in your original financial assessment and these payment will be included in your debt management plan and handled by your professional debt management plan company.

A lot of people these days are looking for ways to get out of debt and for most people the first thing that springs to mind when it comes to getting rid of debt, is bankruptcy.  However most people are unaware of what the bankruptcy process involves and it is only when they actually sit down to find out about it that they realise it is not as simple as just filing for bankruptcy and then having no debts anymore.  If that was the case, wouldn’t everyone be doing it?

Thankfully there are ways to get out of debt so that you don’t have to deal with the stress of being unable to pay your bills.  The problem that a lot of people have, however, is that they try to deal with things on their own and don’t ask for help.  For some reason we are brought up to think of money problems as a subject that we shouldn’t discuss.  It is built in that we shouldn’t talk about money so when we do find ourselves in financial trouble, we try to bury our heads in the sand and hope it will go away.  The reality is however, that your money troubles will not disappear if you ignore them.  They will in fact, just get worse and worse so you have to deal with them head on.

There are a number of things that you can do if you are finding it hard to cope with your debts.  The first thing is to talk to someone about your situation.  This could be someone you know or it could be a financial help line.  Talking to someone can help to take a lot of the pressure off – more in fact than, you would probably think.  There are a number of debt management companies that you can contact too who will be only happy to offer help and advice and a way for you to get out of your situation.

If you want to speak to the experts then it would be a good idea to contact a reputable debt management company such as DFH Financial Solutions.  You will be able to talk about your financial situation and if you wish, you can work through a solution together.  One of the most common solutions to debt problems is a debt management plan.  A debt management plan will mean that you can pay one affordable payment each month instead of struggling to meet numerous commitments.  The debt management company will approach your creditors to come up with a payment that is agreeable to both you and the creditor and you will just pay one sum to the debt management company every month.  The debt management company will then distribute these funds among the various creditors as per the debt management plan.

Using a debt management plan is a great way to become debt free.  Although it will probably take you longer to pay off your debts because of the reduced amount, it will mean that you can start to live your life again without being stressed out by debt that you cannot manage.

An IVA, or Individual Voluntary Arrangement, is the term used for a financial solution to your debt worries. With stark money problems affecting people from all walks of life, getting iva information is a practical step to lifting yourself out of a bad situation.

Most people seeking iva information are tired and stressed from dealing with creditors. They do not see a way out and fear the damage of bankruptcy. While you can not get rid of bad debts instantly and without some consequences, with the proper iva information you can set about changing your financial mess, and therefore your life, in a much easier way then you probably thought possible.

Some iva information you definitely need are the eligibility criteria. You need to have £15000 of unsecured debt, owe to a minimum of three creditors, and have an income with money available to put towards such a plan.

Going through a licensed financial adviser, you enter into a binding contract that will keep the creditors from your door, freeze the interest and charges on those debts and even reduce some of the debt in some places, make sure your repayment plan is affordable, and put you in charge of fixing your money worries.

With any iva information, there are some downsides to such a remedy, but these can be outweighed by the positives. When it comes to sorting out a bad financial position, doing anything is better than keeping your head in the sand.

The iva information you receive will tell you that the arrangement usually lasts longer than bankruptcy, anywhere up to five years, and you can not get unsecured credit for the duration of the agreement. It will show up on your credit report, but even here, at least it shows you are doing something about your situation.

Once you’ve gathered the iva information you need, decide if it is right for you and take the next step of speaking to a reputable adviser. Tale the plunge and face your financial reality. It will help you build a financial future different from your past.