Debt management programmes are designed to keep you from having to take out a debt consolidation loan or file for bankruptcy.  Many people cannot qualify for a loan or do not really have enough debt to make a bankruptcy or IVA filing worthwhile.  When you are still drowning in debt, however, and cannot find a way to get all of your bills paid, a debt management programme is the way to go.  You work with a debt management company to negotiate reduced payments on your current debts, but one thing that you need to remember is that it will take longer than your original credit agreement to pay off.  Plus, there may be additional interest costs incurred by the repayment plan even though your original interest charges are frozen. 

Contrary to popular belief, you do not have to stay on a debt management programme contract until all of the debt is paid off.  Many people use this type of programme as a temporary solution to paying your creditors during periods of unemployment or other times when a regular income is not a viable option, such as sickness.  Once your income has returned to normal, you can cancel your debt management programme without being charged.  Just make sure you give the debt management company at least two weeks written notice when you're ready to start paying your creditors on your own. 

Your debt management payments will be based on how much money you have coming in as compared to how much money you have going out.  A debt management company will work with your creditors to develop a payment agreement that you can afford without strapping you to the point where you cannot handle an emergency.  The company will also provide you with statements from your creditors so that you can see the payments are being made on your behalf.  If your creditor should happen to contact you while on a debt management plan, make sure you listen to what they have to say in case there is a problem with the payments that are supposed to be made on your behalf. 

Debt management plans are not loans to pay off your debt.  They simply arrange payments with your creditors that you can afford so that you can get back on track.  There are no credit checks involved in order to get involved in a debt management plan; however your credit rating could be affected because you are not making your scheduled payments as per the original credit contract.  Be forewarned that not all creditors will accept an arrangement made with a debt management company, and that they can not guarantee that your creditors will not take court action against you even if you are on a repayment plan.  If you are working with a debt management company and this happens, contact them right away and they will help you communicate with your creditors.