Generally debt management plans are drawn up with the help of debt management experts during a single or a series of face to face meetings. During these meetings the financial circumstances of the client will initially be analysed in detail to determine if indeed a debt management plan is the best option.

Once this has been decided, the person organising the plan, the debt manager,  will contact the client’s creditors and attempt to negotiate a cessation of late payment penalties being charged to the accounts, to negotiate reduced or frozen interest payments, and to negotiate an extended repayment period.

The debt manager will take one monthly payment from the client and distribute it to the client’s creditors until the debts are repaid. The single payment will include an element for the debt manager’s fees.

Some of the major benefits of a debt management plan are:

   * Monthly repayments are fixed so there are no uncertainties regarding future payments
   * In many cases interest rates are frozen and additional charges are stopped
   * It is far simpler to make a single repayment that to pay a collection of individual creditors
   * Some of the creditors may be able to stop late fees and lower interest rates.

Some of the downsides of a debt management plan are:

   * It is necessary to close all credit card accounts
   * They are only appropriate for people who have a regular income and can keep to the repayment schedule
   * Once a repayment amount has been agreed, only rarely it is renegotiable
   * Credit rating are adversely affected by debt management plans
   * A debt management plan is only appropriate for unsecured loans

If the debtor is in control in paying off the Consolidated Debt and not generating any new debts, the outcome is promising and will lead to Financial Freedom and a better Credit Rating also. It is an appropriate way of stopping late fees and watching balances on your credit card beginning to recede.  Consolidation is definite way of changing ones spending pattern, having solutions that make sense and bring much needed relief from the burden of debt.

Who can an IVA help?

If you have a total debt exceeding £15,000 and live in England, Northern Ireland or Wales then an IVA can be of assistance to you.

How long does any IVA last?

An IVA will typically last 5 years, but it is possible to complete it in a shorter time if you are in a position to pay off a lump sum.

What does an IVA cost?

When you offer an IVA to your creditors, you are basically offering to pay a percentage of your debt in monthly installments. The fees will be part of this payment and will vary dependant on your total debt and how much you can afford to pay.

It is not likely that creditors will accept any IVA which would lead to them getting less than 25% of the money owed.

Will all of my creditors agree to an IVA?

They might have no choice – if more than 75% of your creditors vote in favour of it, it will automatically be granted.

Will I have to sell my home?

This is the largest benefit of an IVA over bankruptcy – you will not need to sell your home, although you may need to release some equity in it.

If I am on income support, can I get an IVA?

You need to have a regular income to set up an IVA – bankruptcy may be a better option otherwise.

What happens after I have completed the IVA?

You will receive a Statement of Completion, and a copy of it will be sent to the Insolvency Service.

These third party organizations can offer you several services to help get your finances in check. Whether its consumer credit counselling, debt management, home refinancing, loan consolidation, or credit card debt settlement, there is help for every aspect of your financial situation.

For example, for your credit card debt they can: combine all of your debt into a single, manageable monthly payment and in turn pay off your credit cards individually. Debt management such as this helps to relieve the stress of several monthly bills in the mail, and trying to keep track of all your payments. It is also a good option for those who are hounded by credit card calls for missed or late payments.