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Debt Management Plans - How Do They Help?

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The word 'bankruptcy' strikes fear into the hearts of many people who are in financial difficulties. And there's every reason for it to do so. Although some suggest bankruptcy is an easy way out of debt because it's a way of wiping the slate clean and starting again, it comes at a huge price. For instance, your home and other valued assets could be taken away from you. You will be prohibited from working in certain occupations such as the armed forces or police. And that label of 'bankrupt' will be on your credit file for the next six years. A much better alternative is to look at a debt management plan.

A free debt management plan offers a way out of serious debt that is far preferable to bankruptcy and that removes that constant hassle and worry from your financial predicament. You might find yourself in financial difficulties for many reasons and there's a good chance it's not because you've been careless or foolish with your money. Losing your job, getting separated or divorced, suffering a debilitating illness and many other events can all have a huge impact on your life and in many cases on your ability to keep your head above the financial waters.

When you're struggling to pay for day to day living, let alone managing to keep up with loan and credit card repayments, life can seem very dark indeed. The interest just seems to pile up each month and if you miss any payments there's the added hassle of penalty fees. Sometimes you end up borrowing more money in an attempt to pay off existing debts. The spiral of debt soon escalates and to many, it seems inescapable.

Yet a free debt management plan from a reputable company could be just what you need in order to take control of things. The company will negotiate on your behalf with each of your creditors and make arrangements for you to repay your debts. Rather than having to make lots of different payments, you will just make one to the company and from this they will apportion money back to all the companies that you owe money to. It's so much easier than having to deal with them yourself.

You will be able to make this payment either monthly or weekly, depending on how often you receive your income and it will of course be set at an affordable level. You will be allowed a realistic amount of money in order to pay for essentials such as mortgage or rent, utility bills and food.

In many cases the debt management company will be able to negotiate a freeze on interest rates and charges with your creditors. Success in this isn't guaranteed, but because they have good relationships across the credit sector, debt management companies are in an excellent position to undertake these discussions on your behalf.

Another benefit is that you will always be able to call on friendly and expert staff for advice and support throughout the lifetime of your debt management scheme. They can give you a date, by which you will have cleared all your debts and this knowledge is a great encouragement and incentive for many people.

When you're looking for a good debt management provider, it's worth bearing in mind that they're not all the same. Some companies will make a set up charge and may continue to take monthly fees for operating the plan. Make sure you choose a free debt management plan. Another great feature you may wish to look for is an online tracking tool. This will let you see how much you've repaid and how that money has been divided up amongst your creditors.

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