Debt Management Disadvantages
One Advice believe that you should be informed about any disadvantages that might come with any financial agreement, such as a Debt Management Plan.
For more indepth information please call our expert advisors on 0800 019 5870
Disadvantages of Debt Management:
- Creditors are under no obligation to accept your informal offer, whereas with an IVA if over 75% of the value agrees then the others are bound by law.
- As it is not a legal agreement, creditors can change their mind at any time.
- Although your repayments will be more affordable to you, it will take you a longer period to pay them back.
- Your credit rating may be affected.
If you have high levels of debt (over £15,000) then you should see if you qualify for an IVA, which is the only debt solution which can write off a proportion of your debt.
Entering into an IVA may adversely affect your credit rating for up to six years from the date of approval.
Your property will be protected within an
IVA but you may be required to release all or part of any equity during the period of the arrangement.
Failure to complete the term of an IVA can result in bankruptcy.
(In Scotland, a PTD is the equivalent to an IVA.)