A debt management plan is a debt solution that is being taken up more and more in these uncertain times, as a viable means of improving a tenuous financial situation. You will see below the main benefits of choosing this option.

1. You can eliminate your debts through a structured affordable payment plan.

2. You no longer have to deal with your creditors. This is by far the biggest benefit of a debt management plan, because this is the part those causes most stress and concern for most people. The piece of mind that results from having somebody else do this for you is priceless.

3. Interest and charges may be frozen, although this does not happen in all cases it is quite common for your creditors to freeze interest charges and stop adding to your problems by adding additional late payment charges to your accounts.

4. Nobody else need know of your situation. When you petition for bankruptcy, that information will become a matter of public record, easily found by doing a search on the internet. Most local press will also publish the details of any bankruptcies registered in their catchment area, which means that your friends and neighbours may well find out about your situation.

5. Your dignity remains intact while you improve your financial situation. Bankruptcy still has a stigma attached to it. Debt management is a viable option where you are doing your best to repay what you can afford to repay. Because of this fact most people can come to terms with entering into a debt management plan as opposed to filing for bankruptcy.

6. You can speed up the process. Assuming that your circumstances change and you get a pay rise or a better job, you can pay more into the plan to reduce the time it takes to repay your debts.

If you are struggling to repay all your monthly bills and credit cards, the first option you should explore should always be debt consolidation. Taking out one larger loan at a lower interest rate and repaying all your debts, will improve your financial situation without having an impact on your credit rating. Unfortunately this option is open to fewer people these days as most lenders have tightened their lending criteria. Homeowners that have equity in their property are still able to take advantage of this option and would be well advised to choose it as the first option. By far the easiest way to do this is by applying for a debt consolidation loan through a reputable secured loans broker. Most lenders still in the market for this type of loan will only accept applications through a broker, and a good broker will make sure he places your application with the best lender for your needs.

If you do not qualify for a debt consolidation loan, you really do not have too many options open to. Depending on the number of separate debts that you have and also the amount that you owe to them you can either;

1. Enter into negotiation with your creditors yourself and try to get them to agree to freezing interest and accepting reduced payments. This is not everybody’s cup of tea as they are often embarrassed to discuss their problems with the lenders. This will have an adverse impact on your credit score.

2. Speak to a debt specialist and allow them to negotiate a deal on your behalf. This will also have an impact on your credit score.

3. File for bankruptcy. This is by far the most radical option and should not be entered into lightly. This solution will have the worst impact on your credit score.

Author Bio: Tom Dawson is a UK finance expert offering help and advice to UK residents who may be struggling with bad credit and helping them to get a loan at the best rate, why not see what he can do for you.

Category: Finances
Keywords: debt consolidation, loans, debt management, bankruptcy