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Debt Management Plans
If your situation is at the point of no return and you cannot physically maintain your monthly payments then debt management plans may be right for you. A debt management company would write to your creditors and attempt to negotiate lower payments, within your budget. This allows you to keep up your payments to your mortgage whilst living within your means. The main drawbacks are
The lenders are under no obligation to agree to lower payments or to freeze any interest
Your credit file will show that you have defaulted on credit agreements and you will find it difficult to obtain credit in the future. If you do it is likely to be on a higher interest rate than normal
Some of the money you pay will be taken by the debt management company for providing their service.
Debt Management plans are a good temporary solution but should not really be used as long term plans as you may find after several years that you still owe a significant amount
