The Options

Debt Management Plan
Many debt solutions companies offer to reduce your monthly repayments in the form of an Informal Debt Repayment Plan. There are even some organisations who will help you to do this for free (Consumer Credit Counselling Service or Citizens Advice Bureau). When you are under pressure from your creditors this may seem like a lifesaver.

STOP AND THINK… It may be free but is it right?
The biggest claim of most debt management organisations
is to be able to use an informal debt repayment plan to reduce monthly payment to a single affordable amount. 

Such reductions are often possible, however, this is the
only benefit. These agreements are not legally binding
and have significant disadvantages.

• Unless you can come up with a lump sum to offer as a settlement, your debt still has to be paid back in full. Therefore your payment period will be significantly increased often lasting 10 years or more.
• Creditors are under no legal obligation to freeze interest or late payment charges. Added interest will significantly increase your debt.
• You will be credit blacklisted. This will mean that you will find it difficult to borrow more until all of your current debts have been repaid.
• Creditors are under no legal obligation to stick to the agreement. They can ask for increased payments or add further interest at any time