surviving the recession

Debt Management plans are usually arranged by debt charities like CCCS or National Debtline. What usually happens is that these non-profit orgs negotiate with creditors on your behalf, free of charge, to freeze the interest on your credit cards and arrange a payment that you can afford.

If you are in arrears with your payments and being hassled by debt collectors, it’s always worth contacting the above charities and getting your interest frozen.

However, once you have your debt management plan in place, don’t get complacent. Even if you make your payments religiously, you may find that after two years, your creditors get restless and reinstate interest and/or try to force you to sell your house. They will be especially likely to do this if you have disclosed to them that you have equity in your property. Debt management plans are voluntary arrangements, which mean that the creditor can terminate them at any point. They usually grant the debt management plan as a temporary measure, to give you time to sort yourself out.

Therefore, once you have your plan in place, try to do everything you can to raise extra money and stick it in a savings account. See the categories in the sidebar on earning money and earning money online for some ideas how to do this. By using your reprieve to get cash together, you will find that if and when the creditor starts demanding payment in full or starts charging interest, you have a chance to discharge the debt using money you have saved.

Note: Debt management plans are completely different to debt consolidation plans. Debt consolidation usually comes with hideous fees and interest charged, and you should avoid them at all costs. Go through the above mentioned charities to ensure that you are placed on a plan that doesn’t incur fees.