Debt Management Disadvantages
Debt Management Plans are designed to reduce your monthly creditor repayment to a level which is affordable to you. But there are debt management disadvantages which you may need to be aware of.
Please familiarise yourself with both these debt management disadvantages, as well as the debt management advantages, so you are aware of everything that this plan entails.
For more indepth information about potential debt management disadvantages please call our expert advisors on 0800 048 1752
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.
Unsecured debts only. The key benefit of a debt management plan is the ability to only repay what you can afford each month. Clearly, the consequence of this is that it will take longer to repay your debts. You will receive allowances to pay Secured and Priority debts. Whilst you pay our initial fee, monies are not distributed to your creditors. Where contractual payments are missed your debt and repayment term could increase. Terms and Conditions apply.