A debt management plan is an informal financial agreement. It involves a re-arrangement of how outstanding debts will be cleared. Creditors may be asked to accept lower monthly payments and/or freeze interest, helping you repay your debts at a slower, affordable rate.
Bear in mind, though, that repaying your debt over a longer timeframe might increase the overall cost you have to repay (due to interest). Also, creditors are not obliged to agree to any changes in the contractual agreement – if they do accept the changes, this will usually be for a pre-defined period of time (after which, they may wish to re-negotiate with you – or your debt management company). Continue reading “Debt management: who is it suitable for?”