Can you arrange a debt management plan without a debt management company?

If you want to arrange a debt management plan to make your unaffordable debt repayments manageable again, a professional debt management company could make things a lot simpler.

However, you don’t have to use a debt management company. A debt management plan is an informal agreement with your lenders that is not legally binding – so in theory anyone can put one together (although it can only go ahead if their lenders agree to it).

So why would you get help from a debt management company? Here are a few reasons.

How a debt management company can help

Arranging your own debt management plan is not always easy. It involves potentially lengthy negotiations with each of your unsecured lenders. They have to agree to your proposed lower repayments, and if one (or more) of them will only accept a higher payment, you may end up having to rearrange your payments to other lenders.

Then there is the simple fact that dealing with your lenders can be daunting – some people aren’t comfortable with it.

This is where a debt management company can step in. Not only will they help you establish whether a debt management plan is suitable and help you work out how much you can afford to pay, they’ll also deal with your lenders for you – giving you less to worry about.

A debt management company will have plenty of experience of dealing with lenders, and may even have an established relationship with your particular lenders – all of which could help with negotiating lower payments towards your debts.

Things to remember

Do keep in mind that entering a debt management plan will have some financial consequences, regardless of whether you arrange it with a company or on your own.

Making lower payments towards your debts will affect your credit rating, and will make obtaining further credit more difficult for at least three years. And unless your lenders agree to freeze interest and charges, you may find that repaying your debts over a longer period costs you more in the long run.