When a Debt Management Plan is the right Plan

Eric from South Wales, a postman for 25 years was not prepared for the demands landing on his doormat last year. He suddenly found himself in the same position as tens of thousands of others, in the midst of a debt spiral. Like most people, Eric was tempted into taking out many personal loans and credit cards because of low interest rates in recent years. This coincided with credit being very heavily promoted with direct mail shots, telemarketing as well as adverts in the press and on TV.

Typical of many in Eric’s situation, when, at times, he had difficulties in repaying these loans, he found it easy to obtain new credit to pay off existing creditors and to finance his standard of living.

Difficulties started when due to ill health he had to leave his job. Now he had very little income and debts of over £30,000. Many, many people find themselves in a similar position - according to the Bank of England, total consumer debt is running at record levels. It is very easy to loose control of your finances even if outgoings are only a little higher than income. On average customers on debt management plans owe £25,000.

A debt management plan helped Eric, upon a full financial review, negotiations were made with all his creditors and all Eric needed to do was to make one monthly payment, which was then distributed to each loan and credit card company.

After a short period of time on the debt plan, whilst Eric found a new job, he was able to clear all his debts with a re-mortgage from a reputable lender. Now instead of paying relatively high interest rates, he has a discounted mortgage until 2007.

A debt management plan was clearly the right plan for Eric. The right short term solution and the re-mortgage was the right long term solution.