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Debt Management Plan | Pros and Cons

The advantages and disadvantages of a Debt Management Plan

Advantages;

• One single weekly or monthly repayment
• One affordable repayment
• Possibly freeze interest and charges being applied (not guaranteed)
• No more different dates to remember to pay the credit card companies
• Peace of mind knwoing the debts are managed
• Reduce creditor contact and pressure
• NOT legally binding
• Flexible payments should your circumstances change again

Disadvantages;

Certain debts cannot be included within a personal debt management plan such as rent or council tax arrears, student loans and secured vehicle finance including hire purchase or contract hire agreements.  Secured loans are not able to be included but the debt management plan will take into account all of these payments in your monthly expenditure statement

• No guarantee that your creditors freeze interest or charges being applied to your accounts
• No guarantee that your creditors will not take further legal action such as a default or CCJ through a local county court
• Account information, such as payment history, including reduced, late or missed payments is collected by Credit Reference Agencies until the account is closed and then held on a consumer's credit record for a further six years
• Default Notices are kept for six years from the date of default. An account may be recorded as defaulted if only token amounts are repaid
• Any adverse data held on a consumer's credit record will influence creditor's decisions and is therefore very likely to restrict a consumer's ability to obtain credit and/or affect the cost of credit, including a mortgage and even a mobile phone contract
• The information on a consumer's credit file may also affect a consumer's well being in other ways, for example, it may be requested by potential employers.