Debt Management Plan
What is a Debt Management Plan?
A Debt Management Plan is a solution that helps people get back in control of their finances and repay debts at a rate they can afford.
Debt Management Plans are popular with people who are struggling with multiple repayments because it helps them to simplify their finances by consolidating debt repayments into one Plan – making debt easier to manage.
Why choose a Debt Management Plan?
Lower monthly repayments
A Debt Management Plan can help you lower your monthly repayments so that they are more affordable for you. We will take care of all the arrangements for you – including negotiations with your lenders.
What you need to know
The time it takes to repay your debts depends on how much debt you have and how much you can afford to repay each month. It is worth noting that as you will repaying your debts at a lower rate than you originally agreed with your lenders, your credit rating will be affected in the medium term.
Interest & charges could be frozen
We will request that interest and charges are frozen – we can do this in 93% of debts managed through Debt Management Plans.
If interest and charges are not frozen
We will do all we can to get these charges stopped. If lenders do not freeze interest and charges this could lead to an increase in the period over which you repay your debts and the amount to be repaid.
Reduce lender contact
We will speak to your lenders for you so you don’t have to. Once lenders know we are managing your debts for you, they tend to contact us instead – helping to reduce the amount of direct contact you have with your lenders.
If lenders continue to contact you
We cannot guarantee that lenders will stop contacting you completely, but we will do all we can to help reduce this contact. Simply tell your lenders to contact us and we’ll deal with them for you.
Clear your unsecured debts
By maintaining your affordable monthly repayment plan you can look forward to clearing all unsecured debts included in the Debt Management Plan.
To find out more about which debts can be included in a Plan, click here.
Cannot write off debt
Lenders will not write off debts included in a Debt Management Plan, but those lenders who agree to the Plan will let you clear your debts at a rate you can afford.
How a Debt Management Plan works…
Call us for a no-obligation financial review
If you’re interested in resolving your debts with a Debt Management Plan, call us for your no-obligation financial review. This helps us to learn more about your debts and level of income & expenditure.
Once we have this information, we will be able to work out if:
- A Debt Management Plan is the best solution for you
- How much you can realistically afford to repay each month
We’ll negotiate with your lenders on your behalf
While we are setting up your Plan, we’ll let your lenders know that we are working on your behalf. We will then negotiate a lower repayment rate for you and take care of all the arrangements.
Lenders do not have to accept a reduced payment plan, however many years of experience have taught us that most lenders welcome a responsible repayment plan with lower payments based on what you can realistically afford.
We’ll request that interest and charges are frozen
Lenders do not have to freeze interest and charges on your debts, but we will do all we can to get them stopped for you. In 93% of debts we manage, we are successful in getting interest and charges frozen. If you have payday loan debts, we can successfully freeze 94% of interest and charges.
We’ll advise lenders to contact us instead of you
To help relieve any pressure you may be feeling, we will ask your lenders to contact us from now on. Once they know that we are managing your debts for you they will often start to contact us but if you do still receive any letters or phone calls, please don’t ignore them. Simply ask your lenders to contact us and we’ll take care of their queries so you don’t have to.
We’ll distribute payments to your lenders every month
Once we have your Plan in place you simply make one monthly payment to us and we will distribute payment to your lenders.
We’ll provide on-going help and support until you clear your unsecured debts
From your initial enquiry right through to when you clear your debts, we’re with you every step of the way and you will have your own Account Manager to help you adapt to the Plan.
We’ll keep you up-to-date on all the progress you’ve made during your Plan and you’ll also have access to a secure customer log-in centre where you can check on payments.
Whenever you need advice or support, our friendly team is only a phone call away.
Is a Debt Management Plan right for me?
If you’re struggling with debt repayments and are worried about how your finances are affecting your life, a Debt Management Plan could be the right solution for you.
With lower monthly debt repayments and all arrangements taken care of on your behalf, a Debt Management Plan could help you to get back in control of your money and on a path towards a future free from unsecured debts.
- Have two or more lines of unsecured debts (e.g. credit cards, personal loans, catalogue accounts, payday loans)
- Have debts of £1,000 or more
- Are struggling to make repayments
- Have proof of income
Call our friendly team and ask for a no-obligation Financial Review to find out if a Debt Management Plan is the best option for you.
You don’t have to struggle with debt alone – life’s better with our experts on your side.
What you need to know about a Debt Management Plans…
To help you understand more about the Debt Management Plan process we have compiled a list of the most frequently asked questions. If you can’t find the answer to your question here or would like to know more, please call our friendly team; and we will be happy to answer your questions…
DMP FAQs - NEW
If you are struggling to repay your debts, we will contact your lenders, explain your situation to them and propose a new repayment plan that is based on what you can afford.
In our experience, lenders will be happy to see that you are making efforts to repay your debts and are more likely to accept a reduced offer of payment.
Over the years we have built up excellent relationships with over 3,500 lenders – putting us in a great position to negotiate on your behalf.
We will contact all your lenders and let them know that we are now managing your debts on your behalf and ask them to contact us instead of you.
We cannot guarantee that lenders will stop contacting you completely as all lenders are required by law to send out arrears notices and statements every 3 to 6 months – but we will do all we can to reduce the amount of direct contact you have with them.
In many cases lenders will choose to contact us once they know that we’re managing your debts for you, but if they contact you after your Plan has been arranged, don’t ignore their letters or calls. Simply ask them to contact us and we’ll handle their queries so you don’t have to.
Lenders are not required by law to freeze interest and charges if you are repaying what you owe through a Debt Management Plan. However, we will do all we can to get these charges stopped.
When we arrange the repayment plan with your lenders we will also request that interest and charges are frozen and we are successful in this in 93% of debts we manage.
As you will not be repaying your debts at the rate you originally agreed with your lenders, they can issue a Default Notice against you because you have not maintained your original credit agreement. Default Notices can only be issued if you have reached 3 months of arrears. Legally, this allows your lenders to pass your accounts to a third party collections agency. Any Default Notice will remain on your credit file for six years.
If you do receive a Default Notice after you’ve started a Debt Management Plan, please forward it on to us and we will deal with this on your behalf.
If you have already struggled to make repayments on time or have missed them altogether, your credit rating may already be affected.
With a Debt Management Plan your credit rating will be affected in the medium term because you will not be repaying your debts at the rate you originally agreed with your lenders.
It is also worth noting that if you have been issued a Default Notice at any point (including within the Debt Management Plan), this will remain on your credit record for six years from the date the Notice was issued.
Yes. You can even use the Plan to make payments towards any existing CCJs that you have. Just make sure that we know exactly what your current situation is before commencing with a Debt Management Plan.
We will complete a no obligation financial review with you to ensure all payments towards living expenses, rent / mortgage and household bills have been taken into account and you have enough money to pay for these every month.
The money that is left – your disposable income – is what we will use to calculate an affordable repayment plan for you. If you are happy with this and decide to enter into a Debt Management Plan, we can then begin negotiations with your lenders.
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. We will always ensure that you have sufficient money to maintain payments towards your secured debts.
Types of debt included in a Debt Management Plan are:
- 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
- Council Tax Arrears from previous years in your current property
Types of debt excluded from a Debt Management Plan are:
- Ongoing Mortgage repayments
- Social funds and crisis loans
- Hire purchase loans (e.g. car loans)
- Secured loans
- Utility bills
- Student loans (Taken out after 1997)
- Child maintenance
- TV licence
A secured debt is a debt secured against a property or asset that you own. Typical secured debts will be a mortgage, hire purchase loans or homeowner loans.
If you fail to maintain payments towards a secured debt the asset to which the credit was secured could be repossessed. For example, if you don’t keep up with the mortgage, your home could be repossessed and sold by the lender to get their money back.
An unsecured debt is any debt not secured against a property or asset, such as a bank overdraft, a personal loan, a credit card or store card.
No, a Debt Management Plan is not a loan. We neither lend you money nor pay off your debts.
Your payment plan is a solution that allows you to repay your lenders at a monthly rate you can afford. If you do not make payments into the Plan, we cannot make payments to your lenders.
No. Since we do not lend you any money, we do not need to credit check you.
No – we will carry out a financial review to find out if a Debt Management Plan is the right solution for you. This review is what the decision is based on, not whether you are in full time employment, self employed or working part time.
Our financial reviews are under no obligation, so if you’re interested in finding out whether a Debt Management Plan would be the best way for you to deal with your debts, please contact us; we’ll be happy to help.
No, you do not have to be a homeowner to qualify for debt help. It makes no difference whether you are a tenant, a homeowner or even still living with your parents – simply call us to find out what help is available to you.
We would advise that you tell your partner – especially if your partner’s income has to be taken into account to support the Plan.
Lenders are not legally required to stop further action when you enter into a Debt Management Plan; however many lenders will not take formal legal action to recover the debt as they are receiving regular monthly repayments based on what you can afford to pay through the Debt Management Plan.
Being part of a structured repayment plan will also show your lenders that you are making every effort possible to clear your debts.
If you get a letter regarding further debt recovery action, please contact us straightaway and we will do all we can to help.
It really depends on how much debt you have and how much you can realistically afford to repay each month.
As you will be repaying your debts at a lower rate than what you originally agreed with your lenders, it will take you longer to clear what you owe – but you will have the reassurance of repaying your debts at a rate you can afford.
One of the most appealing aspects of Debt Management Plans is the flexibility of the solution. If your circumstances change in the future and you want to increase repayments and clear your debt in a shorter amount of time, you can.
We charge a Set Up Fee of £240, but to make this affordable for you, we will spread the cost over the first 6 to 24 months depending on your individual circumstances.
Your Set Up Fee covers the following:
- Drafting a bespoke payment plan
- Creation of a Debt Management Plan pack
- Initial communication with your lenders to let them know of our involvement
- Negotiations with lenders either in writing or by telephone
- Calculation and issue of reduced payment proposals
- Preparation of the financial statement
- Setting up regular payments to your lenders
- Allocation of a Personal Account Manager
Monthly Service Fee
Your monthly Service Fee is equivalent to 20% of your monthly payment, subject to a minimum of £40 and a maximum of £100. The Service Fee covers the ongoing work we do to ensure the Plan runs smoothly and you are provided with all the support you need.
Rest assured all your other household expenses will be accounted for before your Debt Management Plan repayment is calculated.
You can learn more about our fee structure here.
Over the lifetime of your Debt Management Plan we will:
- Review and act on lender correspondence we receive on your behalf
- Update your Debt Management Plan to deal with any debts that have been transferred to debt collection companies and negotiate with them
- Continue to distribute the agreed payments to your lenders
- Prepare and send to you your regular payment advice documents
- Update your Debt Management Plan to take account of any change in your circumstances and renegotiate your payments to lenders if necessary
- Safeguard your money in a protected client account whilst we hold it
- Provide an online statement and payment facility
If your circumstances change in the future, please contact us straight away so that we can assess your situation and ensure that your repayments are still suitable. Depending on your financial circumstances, we may feel that you would benefit from an alternative solution, such as an Individual Voluntary Arrangement (IVA) or Debt Relief Order.
Alternatively, if you need advice on dealing with personal insolvency or information on going bankrupt, we can help you there too.
There is a cooling off period of 14 calendar days from when the forms are signed and returned to us, in which you can cancel the Debt Management Plan. You can cancel in writing and any fees paid will be refunded.
You can also cancel after this period but any fees paid would be retained.
Yes. You can cancel the Plan at any time and for any reason by sending us written notice – either by post, fax or email. Click here to find our contact details.
No, you will not be charged for cancelling a Debt Management Plan with Baines & Ernst. Simply speak to a member of the team if you wish to cancel.
At the start of your Plan there is a cooling off period of 14 calendar days from when the forms are signed and returned to us in which you can cancel the Debt Management Plan. Any money you paid to us will be refunded (minus the monies already distributed to your lenders).
There are a number of solutions available that can help people deal with their debts such as:
Individual Voluntary Arrangements – freeze interest and charges, write off debt typically at the end of 5 years, stop lender contact – restrictions apply – Click here for more details.
Protected Trust Deeds – freeze interest and charges, write off debt typically at the end of 4 years and stop lender contact. Only available to people living in Scotland – restrictions apply – Click here for more details.
Debt Relief Order – if you are on a low income and have little assets, you could qualify for a Debt Relief Order and become free from unsecured debts in 12 months – restrictions apply – Click here for more details.
Bankruptcy – if you cannot afford to repay your debts, you could apply for Bankruptcy and become free from unsecured debts in as little as 12 months – restrictions apply – Click here for more details.
Getting in touch with us is easy – simply call us on the number at the top of the screen or complete the enquiry form and a member of our team will call you back.
If you are an existing customer and would like the Baines & Ernst Customer Services Team number, please visit our contact us page.
You can download the free guide from The Insolvency Service. ‘In Debt? Dealing With Your Creditors’ which provides an overview to dealing with debt and the debt solutions that may be available to you.
Alternatively, if you’re in Northern Ireland, you could look at the Department of Enterprise, Trade and Investments ‘In debt? Dealing with Creditors’ guide, here. Residents of Scotland can also look at the Scottish Government’s ‘Debt Advice and Information Package’ guide here.