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If you find yourself struggling or unable to make your repayments, a debt management program may be a great option for you. As critical as it may sound, it is simply managing what you owe through a well designed program.

For a nominal fee, there are many financial institutes, banks and organisations that specialise in a debt management program, which can offer you a plan. They will combine all your existing payments into one manageable repayment. This is not a debt consolidation loan, rather your manager works out a plan with your lenders to see how much they will allow you to pay, and how much money you have to pay off.

If your debts are a result of personal financial liabilities as a sole trader, look for specialised debt consolidation agents. Your solicitor and company formation or registration agent should have more information regarding the details of your venture and should therefore be present during the negotiation.

Although a debt management plan is not a loan, in many cases it might require one to consolidate and manage all existing ones. More information below:

  • 1. Debt Consolidation Loan – If your payments are of an amount that your existing income will not cover, most managers will ask you to opt in for a consolidation loan to be able to make repayments. Usually a new loan will give you a lower interest rate than the ones you already have. Hence a debt consolidation loan will help you by paying lower interest rate and save money. If you are looking for a bigger amount, then a secured loan is probably a good option. However, be aware that you are putting your home as a security and failing to make repayments could jeopardise your home. Be 100% sure before taking one out.
  • 2. Negotiation – If your payment lender and your debt manager is the same organisation, they will have a conversation with your existing lenders and try and reduce the interest you will be paying. Debt recovery agents are usually open to negotiation for repayments, whether for commercial debt or unpaid rent. Recovery is always the priority for debt collectors. They try to avoid process serving whenever possible.
  • 3. Counselling – Financial experts on behalf of lenders suggest ways to manage your expenditures and savings. Also they suggest ways through which you can stay away from money traps in future.

Debt management programs are not only open to people who can provide security. It is also available to people with no security or those who are tenants. If you need more advice regarding debt management, you can speak to the Citizens Advice Bureau who can offer a variety options.

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