What is a Debt Management Plan?
A Debt Management Plan is an arrangement between you and your creditors, which is usually managed by a third party, for example a commercial organisation or a debt advice charity. Your debt payments are re-negotiated to a more affordable amount, and the debt management organisation which you have hired can assist you by mediating with creditors on your behalf.
The UK is full of commercial debt advice organisations that get paid if you start solutions like commercial debt management plans and IVAs, or take out a consolidation loan. While these people may be working for your best interests, they might be just as concerned with any other number of factors, such as how much money they could be making.
With a commercial debt management plan, whereby the organisation takes a monthly fee for its services as part of your overall outgoing payment, there is also a minimum required disposable allowance, which is normally somewhere in the region of £100, although in some cases it can be slightly less.
Talking to a debt advice charity with a fair and balanced approach is highly recommended: there are plenty of successful non-profit organizations whose services are equally as valuable as those companies which charge fees. With some excellent free debt management plans available, there is no need to opt for one that doesn't involve all of your money going straight to your creditors.
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