Debt management is an important way to keep your finances in order. If you have a mortgage, a loan or credit card debt or recently had a change in your work status, you should make use of debt management services to make sure you stay on top of your repayments.
Who offers debt management services?
Debt management services are offered by many institutions, and in most cases they can be accessed free of charge. Your bank should offer a certain level of free advice. If you have a mortgage and other loans from one bank or building society, then approach them first and see what services they have.
Many public government agencies, such as the Citizen’s Advice Bureau, offer free debt management services to UK residents. Go to your local council office and find out where you can get advice. There are also numerous non-profit organisations that provide free help to those in debt; many even provide anonymous help, if that’s what you prefer.
What is debt management?
Debt management is, as the term suggests, a way to take care of your debt. In many cases, debt management becomes necessary when your financial circumstances change. This can include if you lose your job, your income changes significantly, you suddenly have big expenses (medical, home, education), interest rates increase or you have simply spent more than you can afford.
All these situations and others can significantly affect your finances. A debt management plan can help you get a clear picture of your income and your debt, as well as how you can start to make repayments.
What type of advice is given?
A debt management plan can be as detailed or general as you require. If it’s simply finding out what you can afford each month, then you can make a quick calculation of your income and your monthly expenses in order to figure out how much ‘disposable income’ you have. This is simple financial planning that can help you understand not only how much you can afford to spend, but how much you can afford to re-pay each month.
However, if your finances are more complicated, for example involving a mortgage, credit card debt, expenses related to education or medical costs, then the calculations and options will need a little more thought. This is where a professional advisor can add value. They will assess your overall situation and, in most cases, give you advice on how you can lower your monthly payments. This could involve consolidating your credit card debt – the most expensive form of borrowing money – and repaying it with a personal loan, for example.
It could also involve asking companies you owe money to if they can set-up a payment plan. There are also many mortgage options available; in some cases you can lower your payments by changing your mortgage type or re-financing. There are many creative ways to improve your financial standing, so don’t wait until your finances are out of control to undertake debt management planning.