The recent news that bankruptcies have fallen to a 15 year low demonstrates the increasing rate with which debtors are seeking alternate methods to escape their financial problems.
The rise of other forms of insolvency and debt relief orders has seen the number of people seeking bankruptcy fall to the lowest level of the Millennium so far.
Debt management plans have become one of the most popular methods for debtors to organise their finances and work their way out of the red and into the black. Realigning their repayments to a level better suited to their financial situation, the debtors are able to pay off the full extent of certain debts over a fixed period. However, only certain debts can be covered in this solution. Here we explore the debts which can be included in a debt management plan.
Credit Cards
Credit cards are amongst the most common forms of unsecured debt in the UK with many debtors drawn in by fantastic introductory offers then hit with high charges and rates of interest. Missing payments can incur further charges, often at extortionate rates, making it important you never fall behind on payments.
Debt management plan advisors specialise in dealing with credit card companies and signing them up to debt management plans on behalf of their debtors.
Store/Catalogue Cards
Similar to credit cards, many people become trapped by store and catalogue cards, struggling to make the necessary repayments and receiving costly charges. Whilst introductory offers may seem entirely beneficial, charges and interest rates may soon make repayments impossible.
Utilities
Missing a utility payment can be catastrophic for a family with water, electricity and gas companies cutting off services in the wake of missed payments. If you’re struggling with the necessary rates of payments, regardless of how frugal you try to be with the use of services, entering them into a debt management plan can help make repayments better suited to your financial situation.
Rent Arrears
A debt management plan can incorporate any rent arrears you owe on a property you have willingly moved out from or been forced to vacate. If you have had to vacate the property due to an inability to make sufficient rent contributions, your contract may still be partially honoured. A debt management advisor may be able to convince the landlord to accept a lower rate of repayment and freeze any charges.
Bank Account Overdraft
If your bank account charges you when you’re in your overdraft, it can be incredibly difficult and frustrating to work your way out of it. A debt management plan can make it possible for you to pay your way out of an overdraft at a rate better suited to your current financial situation, helping you finally get out of the overdraft.
Doorstep Loan
Promising instant cash, doorstep loans can be hugely attractive to those suffering from financial problems. However, the reality is a doorstep loan can leave a debtor in even bigger financial trouble with the high interest rates and charges.
Payday Loan
Payday loans have received a lot of negative press over the past year or two due to negative spiral of borrowing they often enter debtors into. Similar to doorstep loans they offer debtors instant cash and will charge great rates of interest, spiraling borrowers into a never-ending pattern of lending and repaying until interest rates slowly chip away at any capital the debtor may have accrued.
Car Finance
Similar to outstanding debt arrears, unpaid car finance on a vehicle which you no longer drive can be included in a debt management plan. If you have sold a car, still on finance, or written it off you can apply for the repayments to be included in a debt management plan, making the payments more financially feasible.
