Debt Management Plan
A Debt Management Plan (DMP) offers a flexible and informal approach to addressing debt issues, particularly if you're finding it challenging to manage debts exceeding £1,000 and monthly repayments. Payments under a DMP can begin from £90 per month, depending on your financial capacity. We don't impose any upfront fees for initiating a Plan.
A Debt Management Plan facilitates the negotiation of a new and manageable payment arrangement with your creditors, enabling you to repay your debts at a reduced and affordable rate. It's recognized as one of the more adaptable solutions, allowing for easier modifications as needed. Moreover, the plan can be terminated at any time if your circumstances happen to change.
Beginning a Debt Management Plan with our assistance
One of our advisors will engage in a thorough discussion with you to assess the available debt solutions. You'll be requested to furnish details regarding your income, expenses, total debts, and any other pertinent information essential for tailored advice. Subsequently, you'll have the opportunity to choose the approach you prefer for managing your debt.
If you decide to proceed with a Debt Management Plan with us, we will notify your creditors about the alteration in your financial circumstances and your inability to meet your contractual debt obligations. We will furnish them with information regarding your current situation and your proposed repayment plan. Additionally, we will request them to consider freezing any interest and charges on your accounts (although this is not guaranteed), and to communicate directly with us throughout the duration of your plan.
Creditors will notify us of their acceptance of your proposed offer. Payments to creditors will begin upon receipt of your first monthly payment. These payments will be distributed to creditors on a pro-rata basis, following the deduction of our agreed monthly management fee.
If you'd like to learn more about Debt Management, please don't hesitate to give us a call at 0799 955 9004. One of our advisors will be happy to discuss further with you.
Advantages of Debt Management
- Flexibility to amend the agreement if your circumstances change.
- Potential freezing of interest & charges if creditors agree.
- Relief from creditor pressure as all correspondence can be directed to us.
- Consolidation of debts into one affordable monthly payment within the plan.
- Comprehensive preparation and administration of your plan, including negotiations with creditors.
- Representation in negotiations with creditors, increasing the likelihood of acceptance compared to individual negotiations.
Disadvantages of Debt Management
- Reduced payments towards your debts may impact your credit rating.
- The duration of your plan is determined by your debt level, with all debts needing full repayment.
- Extending debt repayment may lead to an increased total repayment amount.
- A DMP does not offer legal protection from creditors, who may still take action against you.
- We cannot guarantee the freezing of interest and charges in your plan, potentially prolonging its duration.
FAQ's - Debt Management
Below are some commonly asked questions regarding our DMPs. If you have any queries, please don't hesitate to contact us, and we'll be happy to provide the answers you seek.
A Debt Management Plan is designed to deal with all unsecured creditors. If a creditor is unsupportive of the plan, adjustments can be made to allow for this creditor to be paid separately. You will always be advised to maintain ongoing payments to secured creditors, such as your mortgage provider.
Debts that may be included in a DMP are (this list is not exhaustive)
- Loans
- Overdrafts
- Credit Cards
- Utility Arrears
- Council Tax Arrears and current year
- Catalogues
- Store Cards
- Payday loans
- Debts to family and friends
- Debts for professional services, i.e. solicitors, accountants, vets etc
- Some debts owing to HMRC for tax and national insurance arrears or tax credits overpayments
There is no set duration for a Debt Management Plan, because the plan will be unique to your circumstances, your total debt level and the amount of your payment each month. The proposed duration of your plan will be discussed with you before your plan begins.
You do not have to be employed to enter into a DMP, however, you must have money available every month to pay into your plan.
It doesn't matter what your residential status is when considering a Debt Management Plan. You can be a homeowner or a renter. A DMP will always be tailored to your individual circumstances.
All correspondence between us is strictly private and confidential. We will never disclose any information about your plan to anyone other than the creditors involved. Should you wish to be discreet in dealing with correspondence from us, we can facilitate this to suit your needs i.e. corresponding via email etc...
If it is possible for you to continue banking with your current provider, then there would be no reason for you to have to change. If you have any outstanding debts with the same provider as your bank account, we would advise that you open a new bank account with a provider that you do not owe money to. The reason for this is that in some circumstances, a bank will freeze your banking facilities when notified of your DMP.
A Debt Management Plan is an informal solution and therefore does not provide legal protection from creditors. A creditor may still take action against you. Should you receive any notification of legal action from a creditor whilst in a plan, contact us immediately.
A CCJ does not impact your ability to propose a Debt Management Plan. You should disclose all information about your debts including any CCJ's you have against you, to ensure that you are given the correct advice for your situation.
Should there be a change in your circumstances which may impact your ability to make your monthly payment, you should contact us immediately, so that we can assess your situation and make adjustments where necessary.
It is advisable that in the event you are unable to make a monthly payment at any time, that you contact our office immediately, so that we can inform your creditors of your inability to pay that months payment. If you continually miss payments to your plan, without notifying or discussing the situation with us, then it is likely that your plan will be terminated. Communication with us at all times throughout your plan is of the utmost importance. We are here to help.
If at any time, you feel that the Debt Management Plan is no longer suitable for you, the plan can be terminated at your request and your creditors notified accordingly. You will still be responsible for any outstanding debts owing to your creditors.
When you enter into a DMP, creditors will be asked to correspond with us directly in regards to your debts. This does not guarantee that you will not receive correspondence from them. However, you should forward this correspondence to us, so we can deal with it for you.
A Debt Management Plan does not appear on your credit file. As you are making reduced payments to your creditors, you may still be issued with default notices which will appear on your credit file. Your credit rating will be affected in the short term and possibly in the medium to long term.
