Debt Management Plan 

A Debt Management Plan is an informal arrangement between you and your creditors to make affordable payments on a regular basis. The payments are based on your own personal circumstances and affordability. We would advise that you complete a "financial statement" and by taking your income and all your essential livings into account, you can calculate how much you can afford to pay each month. This monthly surplus would then be paid to your creditors on a pro-rata basis. This means that the creditor who owns 50% of the total debt, they would receive 50% of your monthly surplus, the creditor that owns 20% of the total debt would receive 20% of your monthly surplus and so on.

There are companies that will set this arrangement up for a fee but, there are companies that will set it up for free. Alternatively, you could contact your creditors and arrange it yourself. This would extend the term of the repayment, however your debts would be repaid in full. Your creditors will need to agree to this and some may not consent, but you can not give them money you haven't got. Whilst in a Debt Management Plan you could also request that the creditor freeze interest and charges so that any payments made are going towards reducing the balance and not paying off penalties. You should be aware any missed payments will be noted on your credit file and most creditors will threaten court action as standard. They are within their rights to take people to court. Realistically, in many cases creditors would much rather make a repayment arrangement with you rather than go to court.

We have a fact sheet and blank examples of the kind of letters you would send to your creditors on our website, which can be found on the “downloads” section of our website, by clicking on the links under "Debt Management Plans". If you need any assistance completing these or have any queries about Debt Management Plans or the companies that provide this service, please call us on 0800 917 4607 and we will be happy to help.

For more detailed information please download our Debt Management Plan factsheet here.