Debt management Program UK

A debt management program involves you working with a credit counsellor to come up with a debt management plan that is suitable to your financial situation.

A Debt Management Plan is an arrangement between you and your creditors to enable you to repay your debts with a regular payment you can afford, however, debt management plans are not legally binding.

A debt management plan usually begins with an assessment of your financial situation, the credit counsellor will collate information about your income and expenditure into a financial statement in order to determine a realistically amount you could afford to pay each of your creditors.

The credit counsellor will then approach your creditors to negotiate reduced payments. In many cases the creditor is happy to agree to the debt management program because they would know from experience that such plans are in some cases the best chance of getting their money back.


What to consider:

Free debt management program
Often the best debt management programs are actually operated by non-profit organisations. The reason why these programs are better is that they have your best interests at heart, they are not thinking about their profit when working out a payment plan for you. Their only goal is to help you with your financial problems and for this reason, creditors will value their recommendations much more.
However, it is worth keeping in mind that because this is a free debt management program, some of the counsellors might be voluntary workers and not as experienced as professional credit counsellors.

Reputable credit counsellor
Besides non-profit organisations, there are also reputable credit counsellors that will provide free consultation services on debt management. Credit Counsellors should be fully certified and ideally follow the Law Society and Financial Services Authority Guidelines to give 'best advice'. This means advising you on the best arrangement for you.

A good credit counsellor should inform you of all the option in the debt management program before you agree to it. You should watch out for counsellors who try to sell you an idea, they might have hidden agendas, such as getting you to agree to options that pay them the most commission.

Confidentiality
Another important aspect in selecting a debt management program is confidentiality. Confidentiality is important for two main reasons: your privacy and security, most people wouldn't want everybody to know about their financial problems. A visit to a credit counsellor should be kept strictly confidential. The information you give during a counselling session is usually very sensitive, you may be asked to give your credit card number or other account details. It is of atmost importance that you can trust your debt management counsellor with your personal information.


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