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Debt Management - Costs & Fees


Debt management plans are informal arrangements that you make with your creditors. Sometimes you can use a free creditor sponsored plan while other times you can use a debt management organisation or a fee-charging company.

A good debt advice service will only suggest you pay what you can really afford in your debt management plan after your monthly expenses have been calculated. Make sure that when you are discussing the plan that you are sure you’ll be able to make your repayments each month.

A lot of debt management companies will end up charging up-front fees for administration and may also charge a percentage of the surplus that is paid to the creditor.

Certain questionable companies have been known to enter debtors into an agreement when an IVA or bankruptcy would be a much better alternative. If you can find a good company that a friend or family member has dealt with in the past this might be an avenue to pursue.

The fees charged by a debt management company are usually calculated as a percentage of the monthly payments that you make. This can add up but most good companies also provide their clients with enhanced support and administration services for their debt throughout the program. It can be difficult for most people to resolve their debt on their own so this could be an option for you.

Another advantage of an established debt management firm is that they often employ dedicated creditor liaison personnel who will negotiate with your creditors to stop interest and reduce your total fees. As with most financial solutions, a debt management plan has many advantages and disadvantages and the best solution is always to avoid debt in the first place.

Are you eligible for Debt Management ?

Try our simple debt solution calculator to find out.