Do you need debt management?

16 July2021

Many people have some kind of unsecured debt these days, whether that's a credit card, store card, or overdraft. The average amount of unsecured household debt in the UK was 7,891 in May 2021 (according to Credit Action).

But if your circumstances change, repaying unsecured debts can become really difficult. Debt management could be one of the options available to people who need debt help.

What is debt management?

'Debt management' describes the process of negotiating lower monthly repayments with unsecured lenders - and making those payments until the debt's paid off in full - when the original payments are no longer affordable. Find out more about debt management here.

The amount you'd pay depends on your disposable income (your disposable income is the money you have available to spend after essential costs). In recent years, household disposable incomes have really fallen, as the cost of living has increased, unemployment has risen and pay has failed to keep up with inflation in many cases. This is another reason people turn to debt management - for many, it's just harder to stay on top of their debts these days.

Lenders often agree to stop adding interest and charges to debts when a borrower starts debt management, but there's no guarantee that they will - and there's no guarantee that they'll accept lower payments either.

Could debt management help you?

If you cannot afford your unsecured debt repayments on top of your essential living expenses, but you do have a reasonable amount of disposable income, then debt management could help.

It can't lower the monthly cost of your mortgage or rent, or utility bills, but by lowering the amount you have to spend on credit cards, loans and overdrafts, it can make these other, important, obligations affordable again.

Making smaller monthly payments does leave you in debt for longer and if interest and charges aren't frozen, it can increase the amount you have to repay overall. Any credit agreement is recorded on your credit record, so lowering your repayments is also going to affect your credit score for up to six years. However, if you're really struggling with your debts, then your credit score is probably already damaged.

If you're having problems with debt, or think you might do in the future, don't bury your head in the sand. Speak to a debt adviser about your options. If you would like someone to talk to your lenders for you, you could ask a debt management company for help.

Contact a debt adviser to discuss your options here.

Tags: debt management, debt, management, debt management plans

Fees payable when continuing service is provided. Repaying debt over a longer period may increase the total amount to be repaid. Calls are recorded and are usually free from UK landlines. Mobile phone users may be charged and should check with their service provider. Cards are provided by third parties and are subject to eligibility, status and terms and conditions. Applicants must be UK residents aged 18 or over.

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