Recently, a particularly lively young friend proffered a post for Funny. It couldn’t have come at a better time: Students bouncing off the classroom walls as the summer term draws to a close, a new puppy bounding from room to room sampling the houseplants, all things mechanical falling apart, and a sleazy roofer trying to persuade a crew whose language he can’t speak to repair their screw-up. I particularly liked this serendipitous offer because the authors give a hint, near the end, about what consumers should watch out for in seeking their services.
Generally speaking, people repaying unsecured debts fall into two categories.
First, there are those that can afford to make their monthly repayments and may simply benefit from some advice on how to maintain control of their debts. Secondly, there are people who find they can no longer keep up with their payments every month, and therefore might decide they need to look for help regaining control of their finances.
Of course, it follows that different circumstances require different approaches…
Can you afford your monthly repayments?
If the answer is no, it’s important to take action to address your problems, rather than running the risk that they’ll get worse.
As there are many potential debt solutions available, it’s important you seek professional advice or help with getting out of debt. A debt management company could help you choose the most suitable approach for your circumstances, and give you expert guidance along the way. For example, a debt management plan could help you—for more on this, simply skip to the next section.
If the answer is yes, you might still want to get some advice on how to clear your debts as soon as possible. Regardless of how comfortably you’re repaying your unsecured debts at the moment, being in debt is always potentially risky—your circumstances could suddenly change, so that keeping up with your repayments every month suddenly becomes difficult.
There are many unexpected changes that could potentially cause your repayments to become unmanageable. For example:
• You may become unemployed
• Your income might drop
• You may face an unplanned cost, such as repairing your car.
Still, the sooner you can pay off your debts, the sooner you’ll be in a situation where you’re no longer running the risk of running up extra charges for missed or late payments.
How could a debt management plan help me?
If you can no longer make your monthly repayments to your unsecured lenders, a debt management plan could help you regain control of your debts.
How does a debt management plan work? It’s an informal agreement between you and your unsecured lenders, in which you—if you decide to draw up a debt management plan yourself—or your debt management company ask the creditors to accept reduced monthly payments that you know you can afford.
If your lenders agree to your debt management plan, they may also agree to freeze or reduce interest on your debts, which means the debts won’t continue to grow as you’re repaying them. However, you should bear in mind that agreeing to smaller repayments will result in a longer repayment period, which could cost you more in interest overall if your lenders don’t agree to freeze interest.
Be aware, too, that making smaller payments will remain on your credit history for six years, which can affect your ability to get credit during that time.