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Debt Management

What is Debt Management?

A Debt Management Plan or DMP is an informal debt solution that allows you to repay your debts at a lower rate than originally agreed. This results in you making lower and more manageable monthly debt repayments usually over a longer period of time.

You can arrange your own Debt Management Plan or you can use the services of a Debt Management Company to manage the plan on your behalf. They will deal with your debts/creditors and distribute the monthly payments for you. Debt management professionals deal directly with the creditors so you don't have to contact the people you owe money to. This is a real advantage at a time when you are already feeling anxious about the debts you have accumulated.

Generally, a Debt Management Company will have more sway with your creditors and can in some cases get interest & charges frozen too (although this is not guaranteed). Most companies will charge a fee for this service so be sure to shop around for the best deal you can find.

A Debt Management Plan is a flexible solution meaning you can adjust payments when necessary, you can opt out of it at any time and you can even use it as a temporary solution, until such times as when your contracted debt repayments become affordable again.

Debt management plans are generally not suitable for people teetering on the edge of insolvency but are perfect if you need a little help to manage your debt and stop it from getting any worse. A DMP can sometimes be just the step needed to get your finances back on track.

A Debt Management Company must be highly regulated in order to oversee your plan. The UK body that regulates Debt Management companies is called the Financial Conduct Authority (FCA), so always make sure the company you choose is authorised by the FCA.

You should always seek advice from a debt advisor or contact your creditors as soon as you realise that you may have a debt problem. If you are having trouble paying bills, and decide to wait to contact them, it will only make the situation worse.

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Debt Management

Debt Management is an informal debt solution that allows you to repay your debts by means of affordable monthly repayments.

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Debt Consolidation

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Bankruptcy is a formal process where you declare your inability to pay your debts. It is usually seen as a last resort solution.

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Debt Relief Order

A Debt Relief Order is like a form of mini-bankruptcy, for people with low income and little or no assets.

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DMP Frequently asked questions

Find out everything you need to know about a DMP by reading our Debt Management questions and answers below. If you have a question that isn't covered here, be sure to get in touch with us and we'll be happy to answer any queries you may have.

Our sister company National Debt Relief handle our Debt Management side of things. If you contact us an advisor will run through a brief assessment in order to advise you of all available options for dealing with your debts. If you think Debt Management is your best course of action, then we will gather the required documents and begin negotiations with your creditors.

When the plan is set up, we will distribute your monthly payment to your creditors each month. You will only have to make one payment each month and then we then divide that payment between all of your creditors, which means you don’t have to contact them directly.

We will oversee your plan regularly to make sure you are happy with the payments or in case you have any change in circumstances. You will have the option to cancel the plan at any time, should you wish.

The disadvantages of a debt management company are that sometimes their upfront fee can be quite high. This can leave you with less money to pay off your debts, which is counterproductive to the intent of paying off your debts in the shortest time possible. We do not charge any upfront fees or set up fees, but we do charge a monthly fee for running the plan, which comes off your agreed monthly repayment towards your debts. We are one of the cheapest debt management companies in the industry and are very transparent about what we charge. You can read more about the costs involved in the following FAQs.

If you use any debt management company make sure they are trustworthy and also make sure to review the agreement very carefully before signing anything. The debt management company should provide an overview of the fees involved and explain them in detail. Sometimes they will be unable to deal with all of your creditors so make sure you know which ones you may still need to contact.

If you need advice about a debt management plan then get in touch and one of our advisors will be happy to answer any questions you might have.

A Debt management Plan is not an official and formal debt solution. It offers a flexible and informal approach to dealing with your debts and because of this companies must be highly regulated and transparent about exactly what their service entails. A DMP is seen as more of an "understanding" between you and your creditors. Whilst a creditor can revert to the original terms of your debt at any time, most will be happy to receive the reduced payment as they see it as you making an effort to repay your debts in the most affordable way possible.

  • A Flexible and informal solution.
  • Affordable monthly payments.
  • You can stop your plan at any time.
  • Creditor pressure may be eased, although creditors can still contact you.
  • We will deal with your creditors on your behalf. You can direct any correspondence to us.
  • We cannot guarantee that interests & charges will be frozen, but as a debt management company, we have a good rapport with creditors, so will do our best to try and get them frozen.
  • Your credit rating will be affected due to the fact that you are making reduced payments towards your debts.
  • The duration of your plan will depend on your level of debt and the amount you can pay each month.
  • Repaying debt over a longer period of time may increase the total amount to be repaid.
  • A DMP does not offer legal protection from creditors. They can still take action against you for the outstanding debt.
  • We cannot guarantee that interest & charges will be frozen.

Certain questionable companies have been known to enter debtors into an agreement when an IVA or bankruptcy would be a much better alternative, so if you can find a good company that a friend or family member has dealt with in the past this might be an avenue to pursue. A respectable company MUST advise you of all options that are available to you.

A good debt advice service will only suggest you pay what you can really afford in your debt management plan after your monthly expenses have been calculated. Make sure that when you are discussing the plan that you are sure you’ll be able to make your repayments each month.

You can do your own Debt Management Plan and negotiate with creditors yourself, where you will pay no fees. There are some companies that offer a free debt management service also.

If you choose to do a Debt Management Plan with us, all fees will be discussed before you begin any plan.

We do not charge a set up fee for your debt management plan, which means your payments will start going towards to your debts/creditors straight away.

For managing your plan we will deduct a monthly management fee from your payment. Our monthly management fee is charged at £25 per month plus £2 per account per lender per month (but will never exceed £50 per month, even if you have a lot of creditors).

The monthly management fee covers the ongoing work involved in setting up and keeping your debt management plan running smoothly. This includes:

  • Reviewing your draft payment programme
  • Figuring out the new repayment proposals
  • Preparing your financial statement
  • Talking to your creditors - renegotiating your monthly debt payments
  • Making the agreed payments to each of your creditors
  • Answering phone calls and letters from your creditors
  • Creating the detailed payment statement, you will receive every quarter
  • Carrying out an annual review of your circumstances (or sooner if you have any significant changes in circumstances).

Your fees also cover a personal case manager who will be responsible for making sure your plan runs smoothly. If it looks like you cannot afford your monthly payments any more, we can renegotiate with your creditors - they may agree to accept smaller payments if it looks like the best way of bringing your debt management plan to a successful conclusion.

Our Debt Management Plans are provided by our debt management company National Debt Relief who are licensed to carry out these activities.

From time to time we may refer you to other service providers or charities such as the CAB.

The Money Advice Service

You can get free debt advice from the Money Advice Service – an organisation set up by the Government to offer free and impartial advice to those in debt. Click here for more information.

Creditors tend to favour a Debt Management Plan over other solutions as they have the advantage of getting their money back in full, albeit over a longer period of time. This if often a favourable option for them, rather than letting you go bankrupt where they may not get any money, or to entering an IVA where they may not receive full repayment.

For this reason, creditors are often willing to enter into these unofficial agreements.

Debt management plans are less intrusive than IVAs or bankruptcy. As long as you can pay the amount agreed each month, how you live your life and what you spend your money on is entirely up to you. Changes in your financial situation in an IVA have to be reported to your Insolvency Practitioner whereas in a debt management plan, as long as you are making the payments you will be left alone. Your situation will be reviewed annually to see that you are making the most affordable payment possible and that there are no changes in your circumstances.

Though debt management plans may last longer than the alternatives, the level of intrusiveness and severity is so much less that they are a good option for many people.

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