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There’s every chance that you have already heard of debt management plans. In the current economic climate and in our generation of credit consumers, such plans are becoming increasingly popular with families and individuals struggling to meet their monthly financial commitments. Most often, debt management plans are aimed at individuals with debts of between £2000 and £12000. The plans are not legally binding, unlike an IVA, which is often targeted at those with higher amounts of debt. They are, instead, an informal agreement between yourself and your creditors, often through a third part debt advice company. The debt advice company will often contact your creditors to try and negotiate a freeze on interest or charges and, in some cases, to even reduce the overall amount that you owe. You then make one monthly payment to the debt advice company, who split that as agreed between your creditors. They will often also take a small fee for doing so.

The major advantage of this type of agreement is simply its convenience. It makes meeting your monthly financial debt repayments much more manageable and affordable. It will, however, invariably show up on your credit record that you are enrolled in such a plan and this could potentially adversely affect your credit prospects.

However, before making a decision either way, it would be advisable to seek out professional advice either from financial advisors in the case of individuals, or from a business debtline in the case of small businesses. Many debt management plan providers will offer free and confidential advice from trained financial professionals.