Debt Management In The Uk
By Debtsolver, Thu Dec 8th

Debt management, as defined in the UK, is a course of actionwhere a reduction in repayment amount and/ or interest chargesis negotiated with unsecured creditors, when you are no longerable to meet your repayment requirements.

For some background, it's interesting to note that in the UK 18%of households are in arrears and are unable to pay their creditbills or make monthly payments on time. According to recent UKstatistics, in the 12 months after personal debt exceeded £ 1trillion for the first time in July 2004, total personal debt inthe UK has risen to £ 1.1 trillion. This amount is equivalent toa £ 1 million increase every 4 minutes. Aside from the harshstatistics the reality of bad debt for most people is anincreased level of stress, leading to ill-health, depression ormental illness or, in extreme cases, even suicide.

For many people who find themselves in a situation where theyare simply no longer able to cope with their financialobligations, a debt management plan can be a solution where theycan reduce their monthly repayments, avoiding bankruptcy, andproviding relief from the stress of being in arrears everymonth. Furthermore your commitments are simplified and you willbe able to deal with your creditors as a whole instead ofindividually.

Debtsolver offer debt management plans for individuals who areresident in the UK i.e. England, Ireland, Scotland and Wales, aswell as the Channel Islands and Isle of Man. It should bestressed that debt management plans are only available onunsecured debts, and does not apply to secured loans such asmortgages, some car finance packages, Hire Purchase agreementsand leases. If you fall into the latter category, we would urgeyou to contact us anyway, as we may be able to find analternative solution.

Although debt management negotiations can take place informally,in the end you as the debtor would enter into a new contractwith your creditors. You would need to provide evidence that anyprevious contractual liabilities can no longer be met. Thismeans that the you would usually need documentary evidence of achange of financial circumstances, for example due to job loss,bereavement, ill-health or other crisis that has led to asubstantial drop in salary or income.

The reduced monthly payment is shared between your creditors,who benefit because they can avoid either expensive legalproceedings or court appearances, or paying fees to debtcollectors. Bankruptcy can be a costly and drawn-out process inthe UK, and debt management is usually a better financialalternative for your creditors, so they will often extendfavourable repayment terms to avoid this.

It's important to realise that unlike debt consolidation, debtmanagement is not a new loan; it's a negotiated settlement withyour creditors whereby you will usually make a reduced monthlypayment that is shared between them. Debtsolver's personaladvisors will help with the debt management process and canhandle difficult negotiations on your behalf. A Summary of theDebt Management Process

Debtsolver will make a complete appraisal of your finances andany other relevant circumstances, including monthly incomingsand outgoings, as well as reviewing your list of creditors. Itwill help if you can provide any other relevant evidence such asletters from your employer, your doctor, medical bills or anyother documentary evidence of the circumstances that led to yourinability to meet your debts.

We will then summarise this information to come up with amonthly payment schedule that you can reasonably afford andoffer to your creditors.

We will then approach your creditors on your behalf with a debtmanagement plan, and usually be able to negotiate a reducedmonthly payment plan.

The plan will continue until your debts are cleared or until youwish to voluntarily end the arrangement. The most common reasonfor this being an improvement in financial circumstancesenabling a client to leave the plan and revert to their originalmonthly payments.

Debt Management Plan Criteria:

For us to be able to negotiate a debt management plan on yourbehalf, you would usually meet the following criteria:

Due to an unforeseen change in circumstances, it's no longerpossible for you to meet your financial obligations.

You are ready to commit to a negotiated monthly repayment thatyou can afford, and that your creditors are satisfied with, andin any case not less than £ 200 per month. Your totalcommitments should not exceed £ 10,000.

You have at least three different creditors with whom you haveunsecured loans or debts.

A debt management plan can reduce your monthly outgoings, andsimplify all your different repayments into one monthly lumpsum, provided certain criteria are met. As well as saving youmoney, this can reduce the stress and anxiety of dealing withmultiple creditors. For more details about a debt managementplan, or for any other enquires, contact us at Debtsolver UK.

About the author:Debtsolver is a UK company providing resources and informationon DebtManagement UK, Debt Consolidation UK, DebtProblems UK and IVA & DebtAdvice