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It has become one of the industry buzzwords lately with an ever-increasing selection of companies emerging over the last few years as debt management specialist.
So what is debt management?
In short it's about taking stock of your life and working out what can be done with all your current circumstances taken into account.
Analysis of what debt management actually means.
Whether you manage it yourself or find a company to do it for you the principle is the same. The way companies go about it varies but the principle is the same.
You first take stock of your current situation, you get up to date statements for all your current debts such as loans, credit cards, store cards and all those utility bills including any arrears on anything you owe.
The next thing is to list all your monthly outgoings not just the problem ones, everything such as food, council tax and all the other annual type bills which you don't pay monthly such as car tax.
These are all then broken down into monthly payments and put into categories by priority such as category A must be paid just to survive such as for food or your council tax. Down to for example category D low priority items you may think are important such as a weekly take away or a weekly haircut but if you are in debt problems can be stopped or at least not enjoyed as often, I'm sure no one wants to look like a hippy these days.
After this you or the debt management company will work out all the house hold income you receive from your wages, benefits, etc and then use this figure to workout weekly income.
If your income equals £300 per week and your outgoings equal £400 then there is a debt problem that will not cure itself. This is where you get down to writing to all the companies you owe money to and asking them to freeze interest and or take a reduced monthly payment to right your situation. Armed with a statement of facts demonstrates to the company your willingness to put the problem right and although not every one will listen the majority of businesses including banks understand that something is better than nothing.
The main differences between doing it yourself and getting a company who specialise in debt management are as follows.
If you do it yourself then you won't have an extra fee to pay the debt management company who make a monthly charge for looking after the debt which will obviously save you money but means you do all the work from drawing up a balance sheet to talking to all the companies and making sure once you have an agreement you stick to it and send those monthly payments on time.
If you do decide to use a company instead you will pay that monthly charge but they will do all the work and normally all you will need to do is send them one cheque a month and they will make sure everyone gets paid what their owed each month
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