Debt Management FAQ

We will inform your creditors of your situation and that you are in a Debt Management Plan.

As a Debt Management plan is an Informal arrangement, your creditors still reserve the right to contact you directly. However, we will write to all your creditors and inform them to contact and send all correspondence in relation to your accounts to us. This will not happen overnight and we cannot guarantee it will stop them contacting you completely but we will do our best and we are always on hand at the end of the phone for help and advice.

Nothing will happen to your property providing you maintain your mortgage or rental payments. In your income and expenditure budget, an allowance will be made for you to make payments for your rent or mortgage.

Aggrieved creditors may decide to pursue a charging order against your home, which secures their debt. This is less likely to happen if you start the process as early as possible and offer a realistic repayment that you can sustain. You should take formal advice if you receive notice that your creditors intend to do this.

In addition, you should ensure that you make normal contractual payments to your utility companies, allowance will be made for these in your income and expenditure budget.

The length of the debt management plan depends on each individual situation, as everyone owes a different amount back to their creditors and can afford to pay back different amounts each month. When initially discussing your plan, ask the advisor what monthly payments they are suggesting and how long it will take to pay back your creditors if you paid this amount.

A Debt Management Plan is an informal agreement that is arranged on your behalf with your creditors to reduce your monthly debt payments. Normally you are still obliged to pay your debt in full, so reducing your monthly payments may increase your length of repayment.

There is no guarantee that the interest and charges will be stopped therefore your debt may continue to increase. It is important that you work with a debt management company who will act on your behalf to negotiate this, as well as making sure that you do not receive direct demands for payment.

Generally, debt management is suited to those with fairly low levels of debt. It offers a short term solution for people needing some time to get back on their feet or those struggling to manage their debt appropriately.

Your debt management company will inform your creditors of your situation and that you are in a debt management plan. They will provide them with the income and expenditure statement that you have completed and make an offer to them for the amount you are going to repay each month.

As the DMP is an informal arrangement, they do not by law have to accept your proposals or freeze the interest. You will be advised if this is the case.

Once you enter into a debt management plan, your credit rating and ability to obtain credit will be affected in the short term, and possibly in the medium to long term though your credit rating may already be affected if you have missed or made late payments.

Where any creditors do not accept the proposals for reduced payments (and even in some cases where they do), collection actions, default notices and litigation may still follow.