• Hassled by creditors?
  • Getting deeper in debt?
  • Having trouble making ends meet?

Debt Management Solutions

How can debt management help you

There are lots of solutions that can help you become debt free and managing your debts can be easier than you think. Often, simply reducing your debt repayments to a monthly amount that you can afford can stop the threat of court action, repossession or a visit from the bailiffs.

What is a debt management plan?

A debt management plan is a simple way of helping you to clear your unsecured debts.

A debt management plan (or DMP) is a repayment plan that turns all your unsecured debts into one single, easy to manage repayment. A specialist debt management company will establish what remaining cash you have available on a monthly basis and what you can afford to pay to your unsecured debts such as loans, overdrafts or credit cards.

The company then negotiates with your creditors on your behalf and shares your monthly repayment between your creditors proportionate to the amount you owe.

What other debt solutions are available?

Bankruptcy is not the only option available to you if you are experiencing debt problems. There are a number of solutions to debt issues depending on your particular circumstances and the amount of debt that you have. Some of the most common debt management solutions are:

  • Individual Voluntary Arrangement (IVA) – a legally binding contract between you and your creditors. Set up by a professional person (such as an insolvency practitioner) an IVA is supervised to ensure that you are paying whatever you can to repay your creditors, typically over a period of five years

  • Debt Relief Order – a new alternative to tackling debt for people with little or no assets and a small amount of surplus income every month

  • Debt consolidation loan – a loan secured against your home which is designed to repay some or all of your unsecured debts. The aim is to reduce your total monthly outgoings to a level that is affordable to you

  • Bankruptcy – a process where a bankruptcy petition is made to the Court (generally by your creditors). In the event of a bankruptcy order being made, the control of your assets (your home, car and all other assets) normally passes to the Official Receiver and are generally sold to pay your outstanding debts

Why should I consider a debt management plan?

If you are struggling to make your monthly repayments to your debts, or perhaps you have already missed one or two payments to your creditors, a debt management plan may be for you.

A debt management plan allows you to reduce your monthly repayments to an affordable level. This has the effect of allowing you to regain control of your finances. It can also satisfy your creditors and stop the regular red letters and demands for payments that you may have been receiving. A DMP may also stop any court or enforcement action.

If you are struggling to pay your debts it is important that you don't bury your head in the sand. Getting advice sooner rather than later can actually help keep the wolves form the door and ensure that you do not end up in an even worse situation.

So, fill in the form on the right today to find out how we can help you.

How does a debt management plan help me deal with my creditors?

By agreeing a plan through a specialist debt management company you will simplify your monthly finances and remove the need for you to deal with each of your individual creditors. The debt management company will deal with your creditors on your behalf, negotiate a payment plan and allocate payments to them based on what you owe.

Debt management plans also help to keep your debt problems out of court. Once a plan has been agreed it often stops creditors from taking action through the county court.

What debts can you help me manage?

Debt management plans are designed to deal with unsecured debts. They can't help you with secured debts such as mortgages or other lending that is secured against an asset (such as your home).

So, a debt management plan can help you manage:

  • Credit cards
  • Personal (unsecured) loans
  • Mobile phone debt
  • Store cards
  • Overdrafts
  • Utility bill or Council Tax arrears
  • Payday or doorstep loans
  • Catalogue debts

If you have other unsecured debts, a debt management plan may still be appropriate. Fill out the form on the right for an advice on what to do next.

So what about the other companies that I owe money to?

When your debt management plan is worked out, your 'priority debts' will be tackled first. There include your mortgage or rent payments and things like your utility bills and Council Tax. These priority bills are considered first and money is set aside to pay them.

Your debt management plan is therefore structured around whatever income you have after your priority debts have been paid. The debt management plan will make proposals to these other creditors whilst you continue to pay your priority debts every month.

How long does a debt management plan last?

There is no specific length of time that a debt management plan will run for. The plan will run as long as it takes you to clear your debts. Bear in mind that as you are likely to be making reduced payments to your creditors, a debt management plan could last for longer than your original loan term.

How much do I borrow under a debt management plan?

Nothing. A debt management plan is not a loan. It is a proposal that is put to your creditors to allow you to make repayments to your debts at a level that is affordable to you.

What if I have a bad credit rating? Will I be credit checked?

As no money is being lent under a debt management plan, there is no credit check involved. This means that A DMP is a viable option even if you have a less than perfect credit history, such as County Court Judgments (CCJs) or defaults.

If you are already making payments towards CCJs then these will be taken into account as a 'priority debt' when agreeing your debt management plan.

How do I qualify for a debt management plan?

To qualify for a debt management plan, you typically:

  • Are having difficulty making payments to your debts on a monthly basis
  • Have more than two debts and/or two creditors
  • Have to be able to afford to pay something to your debts on a monthly basis (typically £50-£100 as a minimum)
  • Must owe over £1,000

If you are in this situation, then you should get in touch with us straight away to find out how we can help you. Complete the form on the right to find out how we can help.

What if I don't own my own home?

You don't have to be a homeowner to benefit from a debt management plan. A DMP helps you repay your unsecured debts and so your residential status is not an issue.

If you are a homeowner, your mortgage payments will be considered as a 'priority debt' before your debt management plan is arranged.

Once the debt management plan is set up, is that the end of my problem?

More often than not, creditors agree a debt managment plan and stick to it – assuming of course that you keep up your payments.

However, there is no guarantee that your creditors will not take further action and there is always a possibility that they will pull out of the agreement and take court action.

In addition, whilst creditors will be encouraged to freeze interest costs, they may still add charges and interest to the debts that you owe.

What do I do if I am still getting letters from my creditors?

You should politely inform them you have entered into a debt managment plan. In the short term, it is possible that you will continue to receive letters or demands for payment whilst the debt management company negotiates with your creditors.

However, one of the advantages of a DMP is that the debt management company will deal with your creditors on your behalf. Let your creditors have the details of the firm dealing with your DMP on your behalf.

What if my circumstances change?

If your financial situation improves and you can pay more to your DMP, this will have the effect of clearing your debts faster.

However, if your income falls, your plan needs to be renegotiated immediately. New proposals can be put to your creditors and your monthly repayment may be able to be reduced to an affordable level. It is important that you do this as one or two missed payments to a DMP can result in the plan being cancelled.

How much does a debt managment plan cost?

This varies from company to company. Many debt management companies charge an administration fee of between 10% and 18% of your monthly repayment although some aim to reclaim these fees from the creditors. There may also be an administration fee involved.

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