Mr D Martin, Poole

Mr Martin’s business was struggling after he lost a major contract. Most of the debts were in his name and we managed to reduce his monthly payments from £585 to £180 a month.

(the list below is designed to highlight some of the main features.)

A debt management company will establish what you can afford to pay your creditors each month and try to agree a reduced payment on your behalf. This can be a good short term solution for those under pressure from creditors and particularly if you are expecting a windfall or significant pay rise in the near future.

Pros

• One affordable monthly payment.
• Can help those with less than £15,000 of debt.
• Once you have supplied your documents the debt management company will negotiate on your behalf.

Cons

• Interest and charges are not always frozen.
• None of the debt is written off.
• It is an informal arrangement and as such your creditors can call a halt at any time and even petition for your bankruptcy.
• There is no fixed term and as such the plan can last for much longer than 5 years.
• The debt management company will usually take at least 15% of everything you pay.

Facts

• A recent survey found that 84% of people accepted for a credit card were not asked to prove their income.
• The level of personal debt in the UK now stands at £1,460bn.
• The Competition Commission concluded that banks are overcharging their Payment Protection Insurance (PPI) customers by £1.4bn per year.

To find out if you qualify for a Debt Management Plan, try our