Debt Management Plan Advice

Help with Debt Management Plans

A Debt Management Plan is a procedure under which a third party, usually a specialist debt management company ("DMC"), will seek to broker an agreement between a person owing money ("a debtor") and his or her creditors, for which they may charge a fee.

Under the agreement, the debtor will be asked to make an affordable monthly payment to the debt management company out of any surplus income, after living expenses.  After deducting any fees, the debt management company will then offer a proportion of this monthly payment to each of the creditors, the actual amount being dependent on the relative size of that creditor's debt.

In considering a Debt Management Plan, it should be noted that whilst creditors may be prepared to accept a reduced monthly payment, they might not be prepared to stop any interest accruing on the outstanding amount or waive other account charges.  Typically, you will be required to pay your creditors in full under a Debt Management Plan, albeit over an extended period of time.

Why can't creditors be forced to accept a DMP?

As it is an informal arrangement, creditors cannot be forced to accept a Debt Management Plan and they may commence or continue any legal action against you at any time.

The ability of a third party to implement a successful Debt Management Plan on favourable terms is therefore dependent on a combination of your own personal circumstances, the attitude of your creditors and the abilities of the DMC concerned.

The Debt Help Line can assist you to propose an appropriate Debt Management Plan to your creditors through our own programme, Debt Shelter™. We charge a monthly management fee of 15% included as part of your monthly payment plus your first monthly payment is taken as a one off set up fee.

Call us on 0800 88 18 274 to find out how we can help at the Debt Help line