How a Debt Management Plan works
The affordable and easy way to repay debts
A Debt Management Plan is an effective way for you to deal with your debts if you’re struggling with repayments.
Our Plans are designed to suit your individual needs and budget so we work closely with you to make sure your repayments are as affordable as possible.
And as we take care of all the arrangements with your lenders, we aim to make the process of clearing your debts as stress-free as possible.
Five steps of a Debt Management Plan
Click the steps below to find out more
1
Financial review
We will go through your current income and expenditure so that we can make sure you have enough money to pay for all your essentials such as rent / mortgage, food and utility bills. Your new debt repayments will then be calculated from the money that is left over (your disposable income). Once we know how much you will be able to afford, we can move on to step two.
2
Negotiate with your lenders:
You will need to provide details on each lender you owe money to, and how much debt is outstanding on your accounts. We will then contact these lenders and negotiate a lower repayment rate on your behalf. We have great relationships with over 3,500 lenders – putting us in an excellent position to secure a more affordable repayment for you.
3
Request charges and interest are frozen:
We will request that lenders freeze interest and charges so that your debts do not increase. Lenders may not always do this, but in 88% of debts we manage, we are able to get interest and charges frozen. We will contact lenders on a regular basis to request this – so even after your plan is set up, we will continue to ask for these charges to stop.
4
Payment distributed to lenders:
You make one payment into the Plan every month and we will distribute payment to lenders included in the Debt Management Plan – it really is that simple. You no longer need to worry about juggling lots of payments and will have the peace of mind knowing that you are repaying your debts on time every month.
What makes a Debt Management Plan different from the other debt solutions, is the flexibility it offers. If your financial situation improves, you will be able to increase repayments and clear your debts in a shorter amount of time.
5
Clear debts:
When you have successfully completed your Plan, your unsecured debts will be cleared!
- Lower debt repayments
- Reduce pressure from lenders
- Peace of mind
- Flexibility
- Clear debts for good
- Get your finances back on track
Debt Management Plans:
What you need to know
What debts can be included in a Debt Management Plan?
Only unsecured debts can be included in a Debt Management Plan, this means debts that are not secured against your property or something you own.
Included in a Debt Management Plan:
- Personal loans
- Payday loans
- Store cards
- Credit cards
- Catalogue accounts
- Bank overdrafts
In some circumstances…
- Rent arrears (from previous properties or current housing association property)
- Mortgage arrears
- Council Tax Arrears from previous properties
- Last year or the previous year’s Council Tax from current property
Excluded from a Debt Management Plan:
- Mortgage repayments
- Social funds and crisis loans
- Hire purchase loans (e.g. car loans)
- Secured loans
- Utility bills
- Student loans
- Child maintenance
- TV licence
Repayment period
The time it will take to repay your debts will depend on the amount you owe and the amount you can afford to repay every month. As you will not be making the repayments originally agreed with your lenders, you may increase the time it will take to repay your debts. However, you will be repaying your debts at a rate that’s more comfortable for you.
Interest and charges
In 88% of debts managed by us, interest and charges are frozen. We will request that your lenders freeze interest and charges; however they are not obliged to do so. If your lenders do not freeze interest and charges, then this could increase the total amount you owe, which could extend the time it will take to repay your debts. However; we will always try to get these charges stopped and will let you know when we have been successful.
Credit rating
As you will not be making the payments you originally agreed with your lenders, your credit rating will be affected for six years following the Debt Management Plan. However if you already have a history of missed or late payments, then your credit rating could already be affected. This means you will find it a little harder to secure credit in the future such as loans and credit cards.
