Sep 222023

With personal debt rising to record levels in the UK, many people are turning to debt management programmes as they look to address and organise their serious debts. But this method doesn’t always solve their problems, and debt management programmes call for careful consideration and analysis of the details and small print.

There’s no doubt that the stress that personal debt brings is taking its toll: The Debt Counsellors Annual UK Debt Survey 2006 reveals that 63.3% of people seeking help for their debts believe they have suffered health problems as a direct result of their financial difficulties.

It is not surprising, then, that many people react to this by signing up to a debt management programme, whereby a company takes control of a debt and deals with the different creditors in return for a set monthly fee.

This sounds like a logical method of reducing the hassle and headache of dealing with different creditors and debt repayments. And while it’s true that there are debt management programmes offered by reputable companies that are of genuine benefit, there are also debt management programmes that seem attractive on the surface but are effective only in making the debt worse.

Close inspection of the details of a debt management programme can sometimes reveal that the cost of the overall debt increases, with added charges and interest rates included in the debt management company’s fee.

While the monthly fee paid to the debt management company might be less than the total sum paid to all the original creditors over a month, the term of a debt management programme can in some cases run for longer, so the final amount paid ends up greater.

The best way to avoid this kind of trap is to get professional debt counselling. Don’t sign up to any debt management programme before you’ve taken independent advice.

Debt management proposals should be looked at carefully with the help of a debt professional before any decision is made. With expert debt advice, you can also find out about all the alternatives to debt management, some of which might well suit your circumstances better.

So be careful, be thorough and get help.

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