Debt Management Disadvantages
A Debt Management Plan is a repayment scheme to your creditors. Like any financial plan there are sometimes disadvantages which are unavoidable.
All Clear Finance can help with potential alternatives if you feel as though a Debt Management Plan is not the right solution for you, call today on 0808 131 0038.
Debt Management Disadvantages -
- It is not a legally binding agreement - meaning that creditors are not obliged to stop your interest and charges, or accept your monthly repayment.
- You will have a poor credit rating, as you are breaking the original terms of your agreement.
- Although you monthly payment will be more affordable to you, it will take you longer to pay back the full amount.
- Debt Management may not be a suitable option if you have high levels of unsecured debt. Please see our page on IVAs for more information.
Entering into an IVA may adversely affect your
credit rating for up to six years from the date of approval.
Your property will be protected within an
IVA but you may be required to release all or part of any equity during the
period of the arrangement.
Failure to complete the term of an IVA can
result in bankruptcy.
(In Scotland, a PTD is the equivalent to an IVA.)