With more and more households facing high debt levels and insolvency, the UK have seen a steep rise in the number of debt management companies. Today, some estimates put their number at over 400 – quite a rise from the days when a 1999-survey of the University of Bristol identified a mere 40. Thanks to the work of DEMSA, an organisation promoting standards for professional and serious work in the industry, debt management companies have managed to become more reputable and trustworthy, although the media are still quick to point the finger in case something goes wrong. At the same time, the business of debt management has remained a mystery to many, begging the seemingly trivial question: What does a debt management company in the UK actually do?
Simply put, debt management is the business of changing the structure of your debt. It is neither witchcraft nor black magic and there often isn’t a bankruptcy attorney involved, but instead relies on hard work, negotiation and various techniques that will eventually bring down your overall debt level. It is not to be confused with debt settlement, although the latter is also frequently handled by the same UK debt management companies. In the case of debt settlement, the debt management company will speak to your creditors to reduce the amount owed and avoid the highly unpleasant and psychologically harmful consequences of being harassed by a debt collection company.
A debt management plan is an agreement drawn up between you and your creditors in a bid of making it easier for you to repay your debt. In a first step, debt management companies will speak to your creditors to see whether interests and charges on your account can be reduced or even frozen, taking your personal circumstances and financial capabilities into account. Afterwards, all of the remaining unsecured credit such as loans, credit cards, store cards, catalogues and overdrafts are bundled into a single, monthly payment. This is called debt consolidation and it is the core component of the competencies of debt management companies. As a result, not only will your debt have become more transparent and easier to handle, its monthly burden will also have been reduced.
Needless to say, there are incisive quality differences between debt management companies in the UK, as this process depends on experience, insight and, above all, close relationships with major creditors in the UK. At the Debt Advisory Line, we can look back on extensive experience and award-winning a debt management company. Allow us to inform you how a debt management plan can regain your financial equilibrium. Call our free national debtline at 0800 157 7254.