Personal debt has reached record levels in the UK. As a consequence, lots of people are signing up to debt management programmes to get their finances in order. However, as many have found to their cost, debt management doesn’t always solve problems – sometimes it makes them worse.
The stress associated with personal debt is clearly taking its toll: The Debt Counsellors Annual UK Debt Survey 2006 revealed that 63.3% of people seeking help for their debt problems believe they have suffered health problems as a direct result of their debts.
To relieve that kind of stress, many people take up the offer of a debt management programme, whereby a company takes control of a debt and deals with the different creditors in return for a set monthly fee.
Whilst this might sound like an effective method of reducing the hassle of dealing with multiple creditors, and although it’s true that there are beneficial debt management programmes offered by reputable companies, there are also deals that seem attractive on the surface but only serve to make the debt problem worse.
When the details of a debt management programme are inspected closely, it sometimes becomes apparent that the cost of the overall debt increases, with added charges and interest rates included in the debt management company's fee.
In some cases, the monthly fee paid to the debt management company might be less than the total sum paid to all the original creditors over a month but this only covers up the fact that the term of the programme runs for longer, so the final amount paid ends up greater.
If you want to avoid this kind of trap, is highly advisable to get professional debt counselling. Don’t sign up to any debt management programme before you’ve talked to an independent debt professional.
Debt management proposals need to be looked at in detail with the help of someone who has experience in giving debt advice. With expert debt help, you can also find out about alternatives to debt management which might be more effective in dealing with your debt.
So approach debt management programmes with caution and seek professional debt counselling.
For more information on debt management, visit http://www.debtcounsellors.co.uk
Source: http://www.ArticlePros.com/author.php?John Porter
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