Sheriff Officers
Debt Management - Disadvantages
Although Debt Management can be an attractive option, in the long term it often ends up leading nowhere. Because no debt is written off and there is no definite end-date, Debt Management can sometimes drag on for years with no hope of a conclusion.
No debt written off
Unlike the Trust Deed, you do not get any debt written off in a Debt Management Plan. Because of this, many people believe that it is a solution that should not be considered first if your debt problems are severe.
No light at the end of the tunnel
Unfortunately there is no guarantee that you will be debt free at any particular time in a Debt Management. The reason for this is that nobody can predict how long your creditors will freeze interest and charges for. In contrast the Trust Deed, for instance, guarantees that you will be debt free in three years.
No legal protection from creditors
Although when a Debt Management Plan is arranged the hassle from creditors usually reduces, it will increase again as time goes on. A Debt Management Plan, being a non-legally binding arrangement, offers you no legal protection from creditor action.
Your credit rating is still damaged
Many people believe that a Debt Management Plan does not damage your credit rating. However, people who are in a Debt Management Plan are technically missing a payment each month. As time passes this gradually affects your credit rating, which takes 6 years to be restored.
The creditors may change their minds
The Debt Management Plan is an informal arrangement, not agreed by a court. For this reason, creditors are free to review the arrangement every few months and start to charge interest and charges once again.
No guarantee of frozen interest
In a majority of cases, we are successful in persuading the creditors to freeze interest and charges. However, nobody can guarantee that all creditors will co-operate, and as time goes by it will become more difficult to get creditors to continue to freeze interest and charges.
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