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If you are struggling to make ends meet but are unsure about taking on a formal debt management solution such as an individual voluntary arrangement or bankruptcy, there is another option to consider. Debt management plans are an informal agreement between you and your creditors, which specify that you will pay a certain proportion of your debts over a specific period of time. These are often drawn up by a third party - usually an independent financial adviser - who can help you to analyse your current financial situation and use this information to determine how much you can afford to pay each month. The plan is then proposed to your creditors and if all the parties agree, your payments are consolidated into one monthly amount to be distributed accordingly. Debt management plans are often a great solution for individuals who owe money to fewer than three creditors, have very little disposable income to repay debts, people with unsecured loans and those who are anticipating a change in circumstances - such as being made redundant. You may also benefit from the discreet nature of this type of plan - debt management plans are among the least intrusive of all the available solutions and you will find your finances are not subject to scrutiny as long as you keep up with your payments. Some individuals find that even the simple act of drawing up a budget helps them to curb their spending or identify areas where costs could be reduced. However, this solution is not for everyone and the informal nature of a debt management plan means your creditors are not legally bound to agree to your proposal. Your independent financial adviser will help you analyse your personal circumstances and give you ideas about what steps to take to clear your debts. Individual voluntary arrangements - known as trust deeds in Scotland - might be worth considering if you owe money to more than three creditors, while bankruptcy is a more drastic and legally-binding solution for those who are struggling with large debts. If you are feeling the pressure of mounting debt problems, get in touch with an independent financial adviser today to discuss the various options available to you.
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