What is a debt management plan or program

Debt Management Plans or programs are an informal process of negotiation with unsecured creditors to obtain a reduction in the contractual repayment and/or a reduction in the interest / charges being levied by the creditor. Debt management plans involve the negotiation process providing evidence to creditors that an individual does not have enough income to meet all their financial liabilities .

A debt management plan is an agreement between you and your creditors following a debt management credit counseling review which concludes with a need for a lower monthly payment that is more affordable (If you are unemployed or have a low income then a debt relief order maybe more suitable). Although a debt management plan is not legally binding the majority of companies do decide to stop further interest charges saving you money in the process. A debt management plan is based on how much you can afford to repay each month. There are many reasons why people get a debt management plan.

If your debts are under £15000 and you are struggling and cannot refinance at an affordable monthly payment then this is a great option to lower your monthly payments and help you to get out of debt and become debt free (If your debts are greater than £15,000 then an Individual Voluntary Arrangement would be more suitable).

How long will my Debt Management Plan take to complete?

It can be put in place very quickly and will normally run for a period of 60 months for you to get out of debt with a DMP. All clients joining a Debt Management Plan receive an individual estimate of the length of time it will take to complete their DMP.

What can I do to make my Debt Management Plan Work?

1. Make sure that you make all of your payment on time.

2. Your debt management plan is managed for you, but it is always worth keeping a check on things, have a look at your statements and if you are unsure about anything that they contain, bring it to the attention of your debt counsellor and they will deal with anything that is not right. When you enter into your debt management plan, your creditors will stop charging late payment fees and interest, so if you are concerned about anything that statements show, JUST ASK!

3. Don’t make any payments directly to your creditors unless you have discussed this with your Debt Manager.

4. Don’t apply for any more credit until your finances are properly back on track and the circumstances that caused your money problems have properly gone for good.

I have more than £5000 worth of debt, can I still get a debt management plan?

Yes. As long as you can afford the monthly payments, click on the link below, complete your details and our debt advisers will help with all your queries, carry out a debt management calculator assessment and can get your debt management program underway with delay.