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How much will I repay on a debt management plan?

26 Oct, 2011 | General | admin

Debt management plans are designed to help people who can’t afford to make their unsecured debt repayments as they originally agreed with their lenders.

Agreeing a new repayment plan could allow you to make reduced payments towards your debts over a longer period of time, in order to make your unsecured debts manageable once again.

Here we’ll look at exactly what a debt management plan is and how much you’d be expected to repay on one.

How does debt management work?

A debt management plan is a debt solution designed for people who’ve lost control of their debts and need to find a realistic, affordable way of repaying them.
Basically, your unsecured lenders would be asked to accept reduced monthly repayments towards your debts that you should be able to comfortably afford. This is because they’ll be calculated to be realistic after all your essential monthly costs – rent/mortgage, food and utility bills, etc. – have been taken care of.

If you’re working with a professional debt management company, in most cases they’ll deal with your unsecured lenders on your behalf – from answering telephone calls and replying to letters, to making sure the agreed amounts are passed on to all your lenders out of the single monthly payment you’ll make.

If you’re looking for this kind of professional debt management plan, Debt Advice Now could help you cope with your debt.

Moreover, if your lenders agree that a debt management plan is the best approach, they may also agree to freeze interest and charges on your debts – although they’re under no obligation to do this. If they don’t, of course, repaying your debts more slowly will mean you pay more interest in the long run, as interest will have longer to accumulate.

And bear in mind that making smaller payments will show up on your credit file for six years, which is likely to make getting further credit difficult in that time.

How much will I repay with debt management?

You’ll be expected to pay as much as you can afford (after all your essential monthly expenses have been paid) towards your unsecured debts on a debt management plan – and it’ll usually last until you’ve repaid your debts in full.
As a result, you’ll have little spare income left once you’ve made your monthly repayments – but knowing that you’re on the path to clearing your debts at a realistic pace could be a huge relief, and help to take quite a bit of stress off you in the long run.




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