Why Choose Debt Management?

Why choose debt management? Some debt solutions seem to offer a lot more for a lot less, so why would anyone select a solution that doesn’t promise an easy way out?

With debt, as with anything else, if it sounds too good to be true, it probably is. There is no ‘easy way’ out of debt. Debt is a real problem and as such deserves a realistic solution. If someone owes money, their lenders are going to do their best to recover it. Wouldn’t you?

Why do lenders agree to debt management?
The best way of recovering a debt varies from case to case. In their line of business, lenders will understand that there’s a limit to how fast someone can repay their debt, and that this limit is different for every person.

So lenders tend to be prepared to renegotiate repayment terms when this is clearly the best way forward. They will, however, expect a certain degree of cooperation, organisation and effort from borrowers in return. This is where debt management comes in.

Debt management – what the company does
Lower monthly repayments. Frozen interest. Waived charges. In general, these are the three main financial benefits a debt management company will try to negotiate on behalf of their client. There’s no guarantee they’ll succeed, but it may be fair to assume an experienced debt management professional stands a better chance than the average borrower.

After all, a debt management expert will know what kind of terms most lenders will agree to in specific situations. They’ll be able to help their client draw up a budget that shows their income and outgoings, so they can provide lenders with tangible, credible facts and figures. Furthermore, a debt management company should be able to propose repayment plans that strike borrower and lender alike as fair and realistic.

Aside from the practical advantages, such as the (hopefully) higher chance of success, there’s also the emotional benefit of working with a debt management company: borrowers can be embarrassed, confused or even angry about their debts, and can find it very hard even to talk to their lenders, let alone come to an agreement with them.

Debt management – what the borrower does
Make no mistake. Debt management is not an ‘easy option’ for borrowers. If they’re to agree to new repayment terms, lenders will expect the borrower to cut back on all non-essential spending to maximise their repayments. And once those new terms have been agreed, lenders may be prepared to renegotiate, but only in cases of genuine financial hardship – if they feel the borrower simply isn’t living up to their side of the agreement, they may feel they have to pursue other action, which could be anything from contacting the county court to trying to make the borrower bankrupt.

As long as the borrower sticks to the agreements, however, a debt management plan can be an excellent way out of debt. Potential lenders in the future will see that they’ve had problems making debt repayments, but that they’ve tackled those problems head-on, entering a debt management plan that helped them repay those debts at a sensible, affordable rate.

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