Debt Management Plans.
Debt Management Plans.
A debt management plan is an informal arrangement between you and your creditors. Any available household income is offered to your creditors on a pro rata basis (the creditor you owe the most money to get a higher payment). Creditors have the right to accept or reject this offer and the creditor may or may not choose to suspend interest and charges on your account. If a creditor rejects your offer you can negotiate to come to an agreement which you can afford.
As a debt management plan is an informal agreement with your creditors it is important you are aware that:
- Creditors do not have to accept your offer of reduced repayment
- Creditors do not have to stop charges or interest
- Creditors may pass your debt to a debt collection agency to collect on their behalf
- Creditors may take legal action against you even if your are paying the amount agreed
- Creditors will seek regular updates of your financial situation and may seek a higher payment.
- Your debt will take longer to pay back than the original agreement and your debt may increase.
- Reducing payments to your creditors will affect your credit rating and will affect your ability to get finance.
- Your home is at risk if you do not keep up repayments on a mortgage or other loan secured on it.
- Your car or any asset on a hire purchase is at risk if you do not keep up repayments on a loan secured on it.
A debt management plan will allow you to gain breathing space from your creditors in the short and long term. However, consider all debt advice alternatives such as a Trust Deed, Bankruptcy or Debt Arrangement Scheme.
At Independent Debt Solutions we are here to answer any questions that you have or deal with any problems. We aren’t a call centre. When you contact us, you will always be able to speak to the same advisor. Our clients are important to us, so we take the time to understand your situation and help you find the solution best for you.