Debt Management

Debt management explained,

Any unsecured loan company such as a credit card lender, High St Banks that you owe money to has the option to seek a judgment in the county court to reclaim their money. However, where you are not trying to avoid payment but are in genuine financial difficulty, the court is likely to order repayments based on your ability to pay.

The court accepts that you must first pay your 'priority' debts, these debt are such as your mortgage, secured loan or rent payments that if your diidnt pay could lead to the loss of your home.They will also take into account essential utility bills such as Gas Or Electric which you have to pay.Also the loss of an essential item like a car that you need for work ect or debts that if you didnt pay could lead to imprisonment such as council tax..

The court further accepts that you need to make other payments to maintain you and your family - so reasonable amounts for housekeeping, travel, clothing, and other similar items are taken into account.

What remains after this is a general guide to the amount of money left to repay your bank, credit card and other non priority credit debts. The court will make a repayment order based on the figure but also take account of monies owed on other credit agreements. In addition, the court will freeze the interest charges so that the debt no longer increases.

The negotiation of reduced debt payments simulates the approach taken by the court. It involves producing a detailed income/expenditure schedule, showing how much spare money is available after priority payments have been made and proposing a fair distribution of this money. At the same time, a request is also made for further interest charges to be frozen.

Arranging a debt management plan is something that you can do reasonably easily yourself, particularly if you use the self-help booklets available from National Debtline or your local Citizens Advice Bureau. However, it is also unfortunately true that the banks and card companies will sometimes respond more positively if a debt advice agency writes on your behalf so if you are struggling to make payments seek advice from debt management companies like the links on this page.