own debt management

chocoholic · Joined: 12 Dec 2006 Posts: 1

hey there.

I looked at doing a debt management plan with a company but i decided i might as well do it myself.

so, 3 out of my 5 creditors have accepted my lower payments. What can i do with the 2 companies that didnt agree the lower amounts?

also, the 3 companies that have agreed to do the debt management with are charging me for making reduced payments. How do i stop this happening?

Should i jsut go to a company?

look forward to some direction....

Andrew · Posted: Thu Dec 14, 2006 9:46 am Post subject:

There is a role for debt management plans (DMPs) in debt resolution and "self debt management" may often be the best route as, if you have the courage to pick up the phone to your creditors, they may be more undestanding than if they just get a letter from a debt management company saying they are going to be getting £X/month from now on!

However, do bear in mind that - as you are already experiencing - there is no certainty in informal debt management. Your creditors can pretty much do what they want - though the question of charges for reduced payments is an interesting one - first, you need to calculate just how much more in debt these are likely to make you. Then, look at this link to a BBC piece on the banks' penalty charges and how they can be challenged.

A debt management plan is probably a good route out of debt if you have temporary money troubles and you can make a plan that gets you back on the straight and narrow (not necessarily repaying your debts in full, but certainly being able to make full payments on loans - and repay a good chunk of principal, as well as interest, on credit cards) in two years or less. When making this plan, make sure you allow for adittional interest to accrue - unless you've been promised a reduced rate or a holiday (increasingly rare these days).

If your problems look longer or more intractable then look at debt consolidation (preferably through a re-mortgage, if you have a property with equity), bankruptcy or an IVA.

Hope this helps,

Andrew