Debt management effectively gets you out of debt by allowing you to make repayments that you can actually afford, rather than having to struggle to survive month after month.

The following information will help you better understand Debt management and decide which of the Debt management solutions is best for you.

There are essentially two types of Debt Management programmes. Both are considered 'informal' arrangements.

Self Help Debt Management.

This is where you contact all of your creditors, explain to each there is a problem with your repayments. You then negotiate a new monthly repayment directly with each creditor. The advantage is there is no Debt Management fee out of the repayment, therefore your creditors will receive all the money you can afford to pay.

The disadvantage is this can be a very stressful and time consuming exercise, made all the more difficult when the number of creditors are multiplied, and when you do not have the experience to negotiate with the creditors

Commercial Debt Management Plans.

This is where you contact a Debt Management company, notify them of all your creditors' details and respective debts to each creditor. The Debt Management company will then negotiate with your creditors' on your behalf and provide the evidence they require that you are unable to afford their current repayment levels.

You will then have one single lower monthly payment that you can actually afford. This is paid directly to the Debt Management Company who will distribute your monthly payment amongst your creditors on a pro rata basis. (Explanation: whichever creditor you owe the most money to will receive the largest percentage share of your disposable income. Whichever is owed the least will receive the least percentage share).

In the vast majority of cases the Debt Management company has arrangements in place with creditors that enables them to have interest payments stopped upon entering in to the debt management program. There is an initial setup and a monthly fee, however the benefits listed below:

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