Debt Management Plans

What is a Debt Management Plan?

A Debt management Plan is an informal debt solution made with your creditors on your behalf by our appointed debt management company to allow you to make one lower monthly payment, to them for them distribute it each month to all your creditors in line with the agreement they have reached. This takes away from you the stress and anxiety of juggling finances and negotiating with creditors. Your creditors are then able to see regular monthly payments being paid to them by our company.

Who can use a Debt Management Plan?

Anyone who can answer yes to these three questions.

• Do you have debts of £2,000 or more?
• Do you have two or more individual creditors?
• Do you have £125 or more available income per month?

Will a Debt Management Plan be the best debt solution?

This will depend mainly on just how much spare income per month you have, the size of your debts and how long you are prepared for it to take to become debt free.

Although informal debt management plans can be used for larger debts, it may be better to consider an Individual Voluntary Arrangement IVA if your debts are greater than £15,000.

Alternatively should you not have £100 per month and no available capital or spare equity in any property, filing for  bankruptcy may be the only option.

With debt management plans you will have to pay back all of your debt, and with reduced payments this could take an unacceptable time.

An example, if you owe £15,000 and normally repay this at the rate of £250/mth, you will be repaying this debt for 5 years. However, if (via a debt management plan) you reduce your monthly repayments to £120mth to fit your budget, you will be repaying your debt for at least 10 years and, even this is not a guaranteed length of time, because additional interest and charges may be added. In contrast, via an IVA you can clear a percentage of your total debts in five years with interest rates frozen.

For further discussion of the relative advantages and disadvantages of Debt Management Plans please click here.

Next Steps

In order for us to help examine all your debt solutions and consider whether a debt management plan may right for you, we will first need to fully understand your problems and the amount of spare income you will have available. We can do this either by visiting you or by you completing our online Financial questionnaire.

You may even find like many of our other clients, that simply completing this helps you understand where your money is going.

If your circumstances are appropriate, our appointed Debt Management company  will propose an informal arrangement with your creditors to pay your debts.

Increasingly, especially if you don't owe very much in total, creditors may ask you to try debt management before being considered for an IVA.

What will happen once a Debt Management plan is considered appropriate?

Our appointed Debt Management company will;-

• Discuss how much spare income you can realistically commit to any offer.
• Contact all you creditors, present them with your financial statement.
• Ask for future interest to be frozen, although this cannot be guaranteed.
• Negotiate with creditors to determine a suitable amount of money you should pay.
• Ask for no further legal action to be taken if you keep to the agreed terms.
• Liaise with you and your creditors to discuss and agree a suitable payment.
• Once agreed they will establish a means for you to pay them the agreed sum each month and will distribute this amount on a fair and equitable basis to all your creditors every month for as long as you are in the programme.

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More information:
Administration Orders
Charging Orders
County Court Judgments
Dealing with Repossession
Dealing with Bailiffs
Credit References
Default Notices
Debt Counselling
Debt in retirement
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Advice on Money
8a Richfield Avenue
Reading
Berkshire
RG1 8EQ

Tel. 0800 970 4882


Email. debt@adviceonmoney-ifa.co.uk