Misrelate

If you’re struggling with personal debt, you may be considering your options right now. The options are quite simple really and depending on your personal circumstances you’ll probably be looking at DIY debt management, professional debt management, debt consolidation, an IVA, Trust Deed or Bankruptcy.

Today we’ll take a look at professional debt management and the pros & cons associated with it:

1 - Cutting monthly costs & saving money
Pros: Monthly payments may be lowered, interest may be frozen and charges may be waived by using a professional debt management company that has a good relationship with the major lenders.

Cons: On the down side, decreasing your monthly payments will increase the amount of time it takes to repay the debt and if the interest hasn’t been frozen it will accumulate of the new longer repayment period. Also, there’s no guarantee that the lender will stick to the terms of the plan as it’s only an informal arrangement.

2 - Reducing stress
Pros: Some people find being in debt unbelievably stressful. If your debt is stressing you out a debt management plan may relieve that stress by taking the hassle of dealing with creditors away from you.

Cons: Not everyone does get stressed out and prefer to keep their finger on the financial button.

3 - Protecting your credit rating
Pros: Debt management companies can have an immediate effect on your finances and your new arrangement may stop your debts from escalating to new levels and further damaging your credit rating.

Cons: Despite the agreement, creditors may still wish to register defaults that would appear on your credit rating.