There are various debt solutions available that could make your debts easier to manage and help you become debt free; debt management is just one of them.

If you enter a debt management plan through a professional debt management company, negotiations and paperwork will usually be handled by them. They will – in most cases – try and negotiate a reduced monthly repayment amount, and ask your unsecured creditors to freeze/reduce interest and other charges.

It is important to note, though, that creditors are not obliged to accept any changes to your original repayment agreements – and that they’ll only consider this if you can show that you can’t afford your unsecured payments as they stand. Plus, if they don’t agree to freeze/reduce interest, you will pay more interest overall as you are repaying your debt more slowly, which means it’ll be accruing interest for longer.

A professional debt management company will help you calculate your disposable income (total income minus essential expenditure, such as secured debt repayments and utility bills). Your disposable income is the sum you can afford to pay towards your unsecured debts every month – you’ll pay it to your debt management company, which will pay the agreed amount to each creditor.

Debt management should ensure that you can afford your secured debt repayments and day-to-day living expenses. It achieves this by lowering the overall amount you pay towards your unsecured debts each month, making them affordable again.

Please bear in mind that defaulting on (failing to stick to) a repayment agreement will show up on your credit report for 6 years – which could affect the cost and/or availability of credit for this time.

What if you’ve only got secured debts?

If you can’t afford the repayments on your secured debts, you should contact your lender as soon as possible. For example, if you can’t afford to keep up with repayments on your mortgage but think your financial difficulties are only temporary, your lender might allow you to take a short ‘payment holiday’ (a period of time in which you don’t make any payments). Your payment holiday could last a few months, if you and your lender think this will give you enough time to regain control of your finances.

There are also government schemes available which can help people who are finding it difficult to make their mortgage repayments, and a professional debt adviser should be able to give you information on these.