Which Debt Management Plan is best for you?

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Warning! Wait! Think! Don’t Rush into something you will regret.

My personal philosophy as a money saving expert is to seek out a free service first and then compare it to a paid service. Take time to find out what the differences are.

There are three different types of Debt Management companies all of which are very different.

The first is a paid service that will offer you help and advice and who will administer your debt management plan for you. This type of company will normally charge an upfront fee dependent on the size of the debt or the number of creditors that they will need to administer and it will be expensive! They also charge a monthly fee for administering your account - this is usually part of the monthly payment you make to your creditors.

The second type of Debt Management,  Plan is run and administered by a charitable organisation. These charitable organisations are funded by donations and they offer you help, advice and will administer your plan for free. By doing this you will find that you are making a bigger contribution to your creditors; this means that you will pay off your debt faster.

The third type of company offering you a debt management plan could be an introducer company. They will be more interested in introducing you to an individual voluntary arrangement (IVA) than a debt management plan as that they receive a bigger commission for their introduction. They will also be mercenary about who they recommend you to. Caveat emptor or Let the Buyer beware is my only advice here.

Make sure you have all your facts, documents and details of your finances when talking to any of these companies. Ask lots of questions and ask those questions again and again until you understand the answers. Remember you are in a very vulnerable position; you lack experience and knowledge of this situation. As you are likely to feel exhausted with your circumstances you will probably be nervous and frightened and feel relieved if someone takes your debt burden off your hands.

Wait! Think! Don’t Rush into something you will regret.

Warning: There are unscrupulous people around and they come across as genuine and concerned about your predicament and your personal circumstances. They will often evoke fear about what could happen if you don’t let a professional help you. Remember, another 24 hours to consider and think about information from the companies you have spoken to is time well spent.

Finally, search out a debt forum and ask someone who has been in your position on the forum about their experiences.Find out what other people think about the companies they are dealing with. You can also go to our forum where you can ask me for free advice or talk with other members of the public - as long as you don’t mind other people reading the responses. I don’t have an axe to grind! Seven years ago I owned a Debt Management consultancy - I have extensive knowledge and experience of this subject.

Your thoughts and comments are very welcome. Click on the comments button below and leave your thoughts and views.

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Tags: Debt Management, Individual Voluntary Arrangement, IVA, Money Saving Expert, talkmoneyforum.co.uk