Benefits of debt management
One of the biggest benefits of a debt management plan is that it lets you clear your problem debts at a pace you can manage, which can take a lot of pressure off your monthly budget. Although, because you are paying less every month, it may take you longer and cost you more to repay your unsecured debts.
It can be a good deal for your unsecured lenders too. A debt management plan is an informal agreement, and your lenders are under no obligation to accept any of the terms they are offered. However, if they do accept the plan, they can be confident the borrower's doing what they can to pay all of the money back (even though it takes longer).
Let's have a more detailed look at the benefits of debt management.
You make one manageable payment each month
It can be so stressful trying to keep up with several debts each month - and this can be much worse if you can't stretch your budget enough to afford them.
Debt management would combine all of your monthly payments to your unsecured debts into a single monthly payment, which is set at a level you can afford. It would mean you're not sticking to your original payment agreements, so your credit rating would suffer - but that might be unavoidable if you can't afford to repay your debts the way you said you would.
Your secured debts, like your mortgage, would not be included in a debt management plan, so you'd need to make sure you pay these yourself, along with things like your Council Tax, petrol and food.
That's why, when you apply, a debt expert will work with you and help you figure out your household budget. They'll need to look at things like your bills and income to make sure they have an accurate idea of what you can afford to pay each month without using the money you need for life's essentials.
Once you've both figured out exactly how much you pay each month towards your essentials, you can look at what's left over and calculate how much should go towards your unsecured debts. This is what you can pay into your debt management plan.
Then, when everything's figured out, this new payment will be proposed to your unsecured lenders. They are not forced to accept this new lower figure, but if they agree, you'll start making the one, smaller payment to us each month.
Interest and charges could be frozen
During negotiations, we will also ask lenders to freeze any interest and charges on your debts.
There is no guarantee they will agree. But we will talk to them about this for you - because this will stop your debts growing while you're repaying them.
If they don't agree, however, paying your debts back more slowly means that interest will have more time to grow - so you'll end up paying more.
Contact with lenders handled by us
Repaying debts can put you under stress, especially if you have various lenders contacting you about different issues.
Once you're on a debt management plan with Gregory Pennington, however, all contact with your lenders can be handled by our professionals.
They'll stay in touch with your lenders, making sure they've all received your payments, and address any issues that may arise.
Your lenders are still legally allowed to contact you, but if you receive any phone calls, you can tell them to get in touch with us. And if you receive any letters, you can put them in prepaid envelopes and send them straight over to us.
Flexibility of debt management
A debt management plan isn't a legally binding solution.
It's quite flexible. So if, during your debt management plan, you receive a pay-cut or an unexpected expense - or your expenditure goes up - your debt management payments could be reduced accordingly, helping you make sure you can still afford them.
This reduction would have to be negotiated again with your lenders - and there is a chance they'd reject it - so we'll do our best to show them it's your best way to keep on making your payments.
On the other hand, you might receive a pay rise - in which case your debt management payments can be increased. This would allow you to clear your unsecured debts more quickly!
Gregory Pennington Online
If you start a debt management plan with Gregory Pennington, you'll have access to GP Online where you can keep up with how your plan is going and view:
- How much you're paying into your plan each month
- How much is paid out to your lenders - and how it's split up among them
- Which lenders have frozen interest and charges
- How much you have left to pay towards your debts.
You can also contact your Personal Finance Team – who will make sure your debt management plan runs as smoothly as possible - and order prepaid envelopes (which you can use to forward letters from your lenders on to Gregory Pennington).
Throughout your debt management plan with Gregory Pennington, your Personal Finance Team will be there to provide help and advice. They are your dedicated port of call when it comes to any questions or queries you might have.
They're the person you should contact if you find you're struggling with your debt management plan - and they'll do everything they can to help. Your Personal Finance Team know about your Debt Management Plan and your finances in general, so they'll be well placed to help you find the best way forward each time.
Things to consider:
These benefits apply if you're on a debt management plan with Gregory Pennington. Of course, you could choose to organise a debt management plan yourself if you're confident about working out how much you can afford to pay your lenders, negotiating with them, making multiple payments every month and dealing with any problems that come up.
We can do all of this for you - which is why we charge for our services. Click here to see what we charge and what it pays for.
If you'd like to know more about debt management, feel free talk to one of our experts.« Back to help centre