Would my job be at risk if I enter a debt management plan?

At a time when the UK jobs market is proving tough - with increasing unemployment, salary freezes and a lack of graduate jobs - more people than ever are worried about their job security.

With the rising cost of living, monthly bills and debt payments to keep on top of, not having a regular salary to cover these costs can be a real worry - and indeed, some people may find that they can no longer afford their agreed repayments to credit cards, overdrafts and any other unsecured debts they have.

If you find yourself in this situation, you should get some professional debt help as early as possible - as ignoring the problem could lead to things getting worse, and could see you facing legal action from your lenders.

Some debt solutions could put your employment prospects at risk - especially if you are in a position of financial responsibility. A debt management plan is less formal and therefore won't affect your job.

If you've fallen into debt problems, you can find debt advice here.

Repaying your debts at a manageable pace

A debt management plan is an informal agreement that your unsecured lenders may accept if you can't afford your monthly unsecured debt repayments as first agreed.

The basic idea of a debt management plan is that you'll repay your debts over a longer period of time - making each monthly payment smaller. You'll be expected to repay as much as you can afford every month - but these payments will be calculated to fit around all your essential living costs (e.g. rent/mortgage, food and bills), so you should be confident that you're repaying no more than you can realistically afford.

Although repaying what you owe over a longer period could work out to be more expensive overall (due to the interest that'll accrue), you'll have the peace of mind that you're back in control of your debts and still able to afford all your essentials.

You should note that making smaller payments will affect your credit rating for up to six years - but since a debt management plan is designed to help only people who can no longer afford their repayments, your credit rating is likely to have already been damaged.

If you want to find out more about debt management, this page could help.

Debt management and your job

A debt management plan requires regular monthly payments, so you'll need to have a regular, stable income in order to enter one.

Unlike with some debt solutions, if your lenders agree to a debt management plan, your job won't be directly affected. In fact, as it's an informal repayment plan, you'll have some flexibility with the arrangement.

For instance, if you have problems with your job further down the line, you may be able to adjust the terms of your agreement as required (e.g. make further reduced payments, or agree a temporary break in your payments until you get back on your feet).

Here at Gregory Pennington, we could give you the debt advice you need and help you find the best way of dealing with your debt problems.

Speak to one of our advisers today to discuss your options.

Daniel Culpan

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