In these difficult financial times, more individuals are finding they are unable to meet their basic cost of living without turning to some form of credit. Once you begin to use credit sources, especially short term or payday loan solutions, the level of debt can easily become unmanageable. It is easy to start a cycle of borrowing that can end with all of your income being used to pay off loans or make interest payments. When debt becomes unmanageable it is essential not to ignore the problem. There are different ways of dealing with debt; two of these are to deal with your creditors directly or to enter into debt management.
Dealing with the debt yourself can be time consuming, and relies on your ability to converse confidently over the phone or to be able to write strong letters or emails. Many companies prefer dealing directly with you and will agree to stop interest and charges if you can negotiate a repayment plan with them. This will involve being honest about your income and expenditure and being able to agree on what you can afford to pay.
Alternatively you can work with a debt management company. You will still need to be honest about your level of debt, income and other expenses. You will also need to provide details about each company you owe money to, and include reference numbers where possible. The company will then contact your creditors and organise repayment plans on your behalf, and you pay a lump sum, usually monthly to the company to cover the cost.
The main advantage of entering into debt management is that once you have provided the details, the creditors’ calls and letters should stop, and you have peace of mind that a professional is working in your best interest. However, before you enter into an agreement check the company out carefully and ensure that they are able to work with the type of creditors you have. You should read any contracts carefully, look for hidden charges and remember that taking this route could affect your credit score in the long term.