Focus on Debt Management Plans: Options For People With Less Than £15,000 Of Debt

If you owe less than £15,000 than you could find a debt management plan will help you get back on track.

Pros: It is handled by a debt specialist on your behalf, so you do not have to have the difficult conversations with creditors you have been putting off. Your interest payments can be frozen, and the debt plan manager may even be able to get the creditors to reduce what you owe. There is less ‘formality’ about this than an IVA or bankruptcy, so your credit rating will not be as badly affected. You will make one payment to your creditors via your plan manager, so it is easier to keep on top of.

Cons: You have to keep up with agreed repayments otherwise you could face bankruptcy. Some lenders may not agree to write off debts or freeze interest. You could be paying the debts off for a longer time than you would under an IVA or bankruptcy.

Any exclusions: You have to have debts of less than £15,000 to qualify.

Alternatives: You can try to speak to your creditors yourself, but you may get less sympathy or help than they would extend to a professional helping you. You could declare yourself bankrupt for debts of as little as £750, but this has severe ramifications for your financial future.

Further reference: Speak to a debt adviser Related: Latest debt news