But often, when you look at the details of a programme, the overall cost to the debtor increases greatly, with added charges and interest rates included in the debt management company's fees.
(PRWEB) April 2, 2006
The Debt Help Site warns that debt management programmes should not be entered into before careful consideration and analysis of the details.
The stress associated with personal debt is clearly taking its toll, as The Debt Help Site Annual UK Debt Survey 2006 shows that 63.3% of people seeking debt advice believe they have suffered health problems as a direct result of their debts.
One potential method of easing the burden of debt problems is a debt management programme, whereby a company takes control of a debt and deals with the various creditors in return for a set monthly fee from the debtor.
In theory, this is an effective method of reducing the stress and aggravation of dealing with different creditors and debt repayments, and there are debt management programmes organised by reputable companies that are of genuine benefit to the debtor.
However, there are also debt management programmes that seem attractive on the surface but are effective only in increasing the debt.
Terry Galvin, editor of the Debt Help Site, explains: "There's nothing wrong with a debt management programme that genuinely makes the debt more manageable without making the debt problem worse.
"But often, when you look at the details of a programme, the overall cost to the debtor increases greatly, with added charges and interest rates included in the debt management company's fees."
Galvin adds: "Sometimes the monthly figure paid to the company by the debtor might be smaller than the total sum paid to all the various creditors over a month but the terms of the programme might run for longer than the original debts, so the debtor ends up paying much more."
To avoid such pitfalls, the Debt Help Site urges anyone considering a debt management programme to take a close look at the figures and terms involved before entering into an agreement, and to take advantage of free, confidential debt counselling for a second opinion.
Galvin says: "Any proposal should be looked at carefully before agreement. There are many debt solutions even for the most serious debts but it is important to get expert advice before deciding what to do.
"There might be an option that is more suitable to a particular case than a debt management programme so professional advice should be sought beforehand."
For more information on debt management, visit http://www.debthelpsite.net
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