As the total number of indebted consumers in the UK increase consumers should look at all the debt solutions available to them before going with the first solution available to them such as the drastic solution of the Individual Voluntary Arrangement or further to bankruptcy.

The most debt rich part of the UK is the North East where approximately 18% of adults have unsecured debts of £10,000 or more spread over credit cards, overdrafts and personal loans.

Creditors have realized the increase in loan defaults on their books and now are tightening their lending criteria causing many more loan applications whether unsecured loan or a mortgage to be declined.  The hardest hit consumer is also getting younger in recent times with new research suggesting the average 24 year old now has debts of £16,351 on credit cards and personal loans with the brunt of the debt landing on parents’ shoulders.

Debt Plan Direct case worker, Paul Johnson believes that many people are being denied proper full debt advice and are opting for options such as the IVA, which in many cases is sold to the debtor as the best debt solution when there are other debt solutions such as the less drastic and informal debt management plan.

Paul Johnson one of the most experienced debt case workers at Debt Plan Direct advises that many people do not know where to turn and just go to the first debt solution they come across without weighing up all their options suitable to the debtors individual circumstances.

Many people who struggle with their unsecured debts take out an IVA to alleviate debt problems when there are options such as a debt management plan to help ease the debt burden and have less impact on their credit file.

As many lenders reject loan applications a debt management plan will enable an individual struggling with debts to restructure their monthly payments into a single monthly payment in line with the debtors’ income so the new single payment will be a lot more affordable and realistic.
 
Paul Johnson also advises people to seek help as soon as they feel they may be heading for trouble with their financial situation or if you are currently finding your monthly repayments difficult.

A debt management plan is also known as a DMP and is a peronalised solution to sort out any payment problems you may be suffering.  The plan is unique to your individual circumstances and takes into consideration your income, outgoings and current level of debt.  Only licensed credit counseling services are able to offer this financial management programme.

So What Does this Debt Management Plan Involve?

The counseling service will first of all ascertain your financial background and the circumstances surrounding why or how it is you got yourself into repayment difficulties.  However remember that a debt counseling agency is not there to judge you but to getter a better understanding of your overall financial situation.  Once this information has been collected a repayment plan can be put into place which would be affordable for you to make and acceptable for your creditors.  Do remember that a debt management plan does require a level of financial discipline and commitment from you if you are to discharge the debt in the quickest time possible.

An informal agreement is then put in place and the new revised offers of payment put forward to your creditors.  Once accepted the debt management plan will then allow you to repay your debts at through a single monthly payment you can afford and stop any creditors from hassling you as well as stopping or reducing interest and charges.

What to be Aware of When Entering into a DMP

Before entering into a DMP ensure you are fully aware of all the initial costs to set up the plan and what the management fee will be for the ongoing term of the plan.  In addition to this check any debts that cannot be included into the debt management plan as you will need to repay these debts yourself. 

Once the plan begins it is important to maintain your monthly payments and not to default on your plan else your creditors can terminate the reduced repayment plan and take further legal action so when agreeing the fixed monthly   payment ensure it is a realistic and affordable monthly payment for you to make and maintain for the duration of the plan.

A reputable debt management company will send out statements of all the payments being received and what payments are being made to your creditors so you know where you stand financially. As well as this an estimate of when you will become debt free should also be given.

Debt Plan Direct provide a national consumer debt counselling service providing full advice on all aspects of debt, budgeting and financial affiars.  Debt Plan Direct are one of the UK’s most prominent provders of debt management plans. 
 

It is a fact that in the UK during the last six months over half a million people missed their mortgage payment as a result of their existing debts squeezing their affordability.

One of the reasons for missing a mortgage payment is due to an increase in unsecured debts levels on loans, credit cards and overdrafts and having to manage the repayments on all of them. In addition to your unsecured borrowing you have your normal living expenses to contend with such as your weekly shopping, utility bills and council tax.   So if you have missed a mortgage payment there may be an underlying debt problem.

Fortunately missing a mortgage payment will not lead to any additional fines or charges as you would on a credit card debt but missing mortgage payments does indicate potential signs of financial problems.

Your rent or mortgage payment is a priority debt so should always be paid ahead of your unsecured debts such as credit card and loans to ensure no action is taken by your landlord/ lender to evict you.  Continuous rises in the base interest rate has left many homeowners to struggle with their mortgage payments along with other debts so it was a relief for many homeowners when the first rate cut was made back in December 2007 due to the increasing debt problems suffered by many in the UK.
 
The base rate cut may be a little too late for many people with struggling amounts of debt as their Christmas spending in addition to existing debts on loans, credit cards and overdrafts from the previous year begin to hit home.

If you are looking to consolidate your debts through a low interest loan you may have problems in either getting a consolidation loan or one with a low interest rate if you have missed payments on your debts this will be reflected on your credit file and many lenders will then see you as a potential risk in lending money to.
 
A debt management plan may be the best solution to manage your debts and avoid missing mortgage payments.  A debt management plan will allow you to consolidate your credit cards, loans, mail order catalogues and overdrafts into a single more manageable payment; with the interest and charges either stopped or reduced.  You then have less worry to make payments on multiple debts and instead will just have to make your rent or mortgage payment and a single affordable payment into your debt management plan.

We all now that personal debt in the UK is a major concern and there now seems to be a trend to find debt solutions to become debt free.  Individuals in the UK are now finally realizing that there are two facts for debt relief: One- it is possible to become and lead a debt free life and secondly there is nothing to be scared or ashamed of to ask for help when required.

Britains are now coming forward asking for support to fight their spending habits and eliminate their debts.

Suggestions for Instant Debt Relief

1. Start to pay of your bills as a top priority and stop any shopping habits.
   Reduce your daily spending amount and only spend money on your basic living expenses.
2. Cut all your existing credit cards and only use your debit cards or that hard earned cash.  This will stop you overspending immediately. Using credit card is one of the major reasons people get into large amounts of debt.
3. Try to do your shopping monthly instead of going every now and then when you need something- this will help reduce fuel expenses as well as saving you time.
4. Keep away from designer clothes and other luxury goods until all your debts are fully paid off and you are earning a good salary.
5. Don’t buy your lunch at work instead be healthy and save money by packing your lunch from home.  This will save you pounds in more ways than one!
6. If having a family or friends get together  ensure you prepare the budget for the party first and not the other way around.  This is a mistake that many people make when making arrangements.  Planning the party and then fixing a budget accordingly is the worst form of management!
7. Try to reduce your utility household bills by switching to a cheaper provider and the same with your telephone, mobile or broadband companies. Another simple way towards debt freedom to help repay those debts!
8. Try to find a second job to fit around your spare time along with your main job.  You can use the second salary for paying off your debts.
9. Save those pennies and the pounds will save themselves.  Forget the lottery as well as other small bets you might gamble with!

A good consolidation loan is always a good choice for some but be cautious and make sure the term, interest rates and the total amount repayable is made clear to you as in some cases you may end up paying more with a consolidation loan than compared with managing your budget and repaying debts through a debt management plan.

Carrying out a debt management plan is not as easy as it appears.  Many people think the process of combining all the debts into one lump sum payment and paying the debts off can be done by themselves.  Well, to be quite frank if it was that easy then people would not be getting themselves in debt in the first place!Before discussing debt management further it is important to distinguish between managing debts and debt consolidation. The former is a help plan to get you debt free from all of your personal debts.

 With a debt management plan you will no longer need to deal with your creditors yourself as the professionals will contact and negotiate directly with all your creditors for you as well as making the monthly payments! They will also negotiate with creditors to freeze or reduce interest charges. Once the plan begins, you only need to pay a single monthly more affordable payment.  You will find this will give you instant relief!  Your Monthly PaymentYour monthly payment into the plan will be based on your monthly income and living expenses and will be in line with your circumstances so affordable.  Once your payment is calculated the payment will be fixed.

With a consolidation loan your monthly payment will also be fixed and lower than your current outgoings but due to the rate of interest and the term of the consolidation loan you will be paying more back in the long term than your current debt level. It is therefore not wrong to state that a debt management plan can sometimes prove to be better than a debt consolidation loan.A Debt Management Plan will not only enable you to consolidate your debts into a single monthly , more affordable payment but will also allow you to escape the trap of continued debt..  So don’t be embarrassed if you are in need of debt help and contact a professional debt advice company for assistance.