Struggling with debt can be a tricky issue to navigate, especially with the cost of living currently rising. If you are in debt, knowing that you aren’t alone and that there are solutions out there that can help you can ease your worries.
One way to manage debt (1) is with a debt management plan (DMP). They are usually set up by a third-party provider, such as charities or debt management companies, such as Fresh Start.
DMPs can help you take control of your debt. Discussions with your creditors will take place to arrange lower monthly payments and interest rates. This can mean debt might take longer to repay but will make the monthly payments more affordable.
This isn’t a one way ticket to becoming debt free, however. Even if you set up a DMP, creditors are still able to reject new payment negotiations and interest and charges may continue, so you could still have an increasing balance.
Getting advice from debt management charities and companies before deciding if a DMP is suitable for you is a good first place to start. You can find debt advice online or contact them in person or over the phone.
If you find this is the best solution for you, you will begin the process of setting up a DMP. This includes organising all of your monthly expenses and income and working out what is affordable for you in terms of repayment.
You will then be able to consolidate your repayments into one monthly payment, which your DMP provider will then distribute between your creditors. This makes it easier to manage your finances and keep on track with monthly payments.
However, there are drawbacks associated with DMPs as well, which are worth bearing in mind. These include the fact that there is no guarantee that interest and charges will be stopped and no guarantee that creditors won’t take legal action against you.
While DMPs may not be the correct resolution for everyone, they can help if you are struggling to meet your minimum payments every month or are unable to keep track of payments and frequently miss them.
If you are struggling with debt as a result of the cost of living challenges you can contact the Fresh Start UK team today.
References
1. https://www.citizensadvice.org.uk/debt-and-money/debt-solutions/debt-management-plans/debt-management-plans-explained/debt-management-plans-what-you-need-to-kn
