Debt Management Plans – DIY or Professional?
Debt management is a way to manage your debt problems. It can be undertaken by an individual often taking advantage of free help that is available from charitably organisations such as the Citizens Advice Bureau, or it can be set up professionally using a debt management company or organisation.
The advantage of doing it yourself with the help of an organisation such as the CAB is that it is free, but that is probably where the advantage ends as doing it in practice can be difficult and there are many potential pitfalls that need to be negotiated.
The disadvantage of using a professional debt management company is that you will need to pay a fee which is in most cases around 15% of the total repayments that you will make towards your debts. When the plan is in place you will make monthly payments to your debt management company most of which will be redistributed to your creditors but which will also include the 15% fee.
As it says on the tin, a debt management company manages debt professionally. Just as you could pop in to your local pharmacist for some informal advice on which medicine to take for a particular ailment, you would almost certainly be better advised to pay a visit to your local General Practitioner. The advantage of using a professional organisation is that the people with whom you deal do what they do every day of the week. They are used to dealing with creditors and they know the right buttons to press and boxes to tick. An individual will be attempting to achieve the same thing for the first time, and the chances of getting it wrong are substantial. It could end up costing a lot more than the 15% fee.
No doubt the DIY approach works out for some people, particularly if they are skilled negotiators and can deal with their debt collectors in a cool or objective manner, but most find that the benefit from professional help.