What Types of Debt Can Be Included In a Debt Management Plan?

by Kate on October 20, 2014

in Advice From Partners

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A Debt Management Plan can bring debt repayments into one affordable monthly payment. This type of plan helps to restructure debt repayments to suit the financial situation of the debtor.

A debt management advisor will help the debtor measure their repayments against their income and develop a better suited rate of repayment. They then approach creditors and propose this new repayment structure, clarifying the benefits for all parties.

This can help appease creditors, by assuring them they will receive the outstanding payments.
Here are the types of debts which can be included in a debt management plan:

Credit Card
Missing credit card repayments can lead to high interest rates and charges – making it important you can meet the monthly billed amounts. A debt management plan can help restructure credit card payments in line with your income, and an advisor can also seek to freeze added interest and charges.

Store/Catalogue Cards
Store/catalogue cards often come with introductory offers making them seem like a great money-saving option. However, late payment charges can soon lead to high repayment costs – incorporating them into a debt management plan can help simplify the repayment process.

Utilities
Missing utility payments can be devastating with gas/water/electric services potentially being cut by the providers. A debt management plan can help protect you against this eventuality by restructuring the repayments in line with your financial situation so you’re never again on a final warning from your utility provider.
Debt management plan specialists InControl have a Disposable Income Calculator on their site – take a look here – which can help you determine utility payments you can realistically afford.

Rent Arrears
A debt management plan can help you pay off the debt owed to a landlord on a property you have been forced to vacate. If you have been forced to vacate a property due to the inability to pay the rent, a debt management plan can help restructure the payments in-fitting with your financial situation – making it possible for you to get back on your feet.

Bank Account Overdraft
It can seem incredibly difficult to work your way out of a bank overdraft. If you suffer from additional charges for being in your overdraft, securing a debt management plan can help you pay your way out of the overdraft with repayments better suited to your financial situation.

Unsecured Personal Loan
Any loan secured from a bank or lender without any collateral offered can be covered in a debt management plan. Missing personal loan payments can have a significant detrimental effect on your credit rating, making it important you can afford the rate of repayment. This makes debt management plans an attractive option for debtors with personal loan repayment amounts higher than their income.

Payday Loan
A lot of debtors are struggling to repay the high rate of interest on payday loans at the moment, with the industry threatening to spiral out of control. Payday loan debtors can restructure their repayments with a debt management plan to ensure they do not suffer the consequences of missing repayments and the inflicted interest rates.

Doorstep Loan
Doorstep loans can seem incredibly attractive due to selling points such as the promised possibility of securing such a loan within 15 minutes. However, these loans often come with high rates of interest and devastating penalties for missed repayments. A debt management advisor may be able to convince a doorstep lender to freeze interest rates and missed payment charges.

Car Finance
If you have sold or written off a car you are still paying for, a debt management plan could help ease the financial burden by restructuring the repayments in line with your financial circumstances.

Mobile Phone Debts
Phone tariff extras and charges are often hidden in the fine print of a contract, sometimes catching out unsuspecting users hit with expensive bills at the end of the month. A debt management plan can help these debtors realign and restructure their regular repayments. This can apply to customers who have been unexpectedly hit with the high costs of data roaming.

Contracted Services Debts
A debt management plan can help you repay the set-term contracts of services such as childcare and gym memberships. If you are not using these services any more, the regular repayments can feel like an incredible waste of money but a debt management plan can help ease the financial burden of these repayments.
There are a number of advantages and disadvantages when seeking a debt management plan which should be discussed with a specialist advisor before committing to the plan.

Image credit: Chris Potter

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