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What is a Debt Management Plan?
A Debt Management Plan is an agreement you make to your creditors, with the help of a third party Debt Management Company, to pay off your debts every month over a longer time period.
How long is a Debt Management Plan?
There is no set time a Debt Management Plan runs for. It depends on your level of debt and the amount of money you have left over after you have paid off all of your living expenses. However, if the term you propose is too long (as a rough guide more than 10 years) creditors may refuse to accept your Debt Management Plan. However, if you receive a pay rise or lump sum and want to renegotiate your Debt Management Plan that could pay off your debt much sooner than you planned to
What debts can I include?
Only unsecured debts can be included, secured debts cannot. Secured debt includes mortgages or any debt generated by taking goods on hire purchase agreements, such as cars, domestic appliances or furniture. These cannot be included because you do not own the goods yet and if you default on payment the lenders will take back the goods.
How much debt can I have?
You should have a minimum of £5,000 of debt and there is no maximum limit on the total amount of debt you can include. However if you have a lot of debt, but not a lot of disposable income your creditors may refuse to accept you agreement if they cannot see how you can pay it off successfully.
How many debts can I have in my Debt Management Plan?
You must have two or more separate debts. Two or more debts from the same lender can be classed as separate, even if the lender does not regard them as so.
Are there any rules for where I have to live in the UK to be eligible?
Unlike IVAs and Trust Deeds, Debt Management Plans are UK-wide and open to everyone who meets the financial eligibility criteria.
Do I still have to pay interest?
Usually your creditors will be agreeable to freezing the interest and charges on your debt for the duration of your Debt Management Plan, so your debt should not get any bigger.
Do I have to deal with creditors?
With the help of a Debt Management Company, you will not have to deal with the stress or hassle of creditors again for the duration of your plan. Once your plan is up and running you can refer any creditors who attempt to contact you to them to take care of.
What happens if I cannot make my monthly payment?
As soon as you know you will have a problem making a payment, contact your Debt Management Company and tell them. They may be able to arrange a payment holiday under special circumstances, such as if you had been made redundancy or experience sudden ill health.
Can I stop the Debt Management Plan and do an IVA or Trust Deed instead?
You can stop your Debt Management Plan if you wish and register for a trust Deed or IVA; however you will need to appoint an Insolvency Practitioner to act as your Trustee and negotiate with your creditors for a new agreement.
Do I have to pay a Debt Management Company?
You can expect a Debt Management Company to charge for the service they provide, usually a fixed fee every month for negotiating with your creditors and distributing your payment to them.
What if I forget about a debt?
Many goods can be bought on 'buy now, pay later' terms and these debts can often end up overlooked and forgotten when sorting out a Debt Management Plan. If you do suddenly receive a letter telling you about a new debt to be paid, contact your Debt Management Company as soon as possible and ask them to renegotiate with your creditors so this new debt can be included.
How do I apply for a Debt management Plan?
Contact us on 0800 043 2027 and we can guide you through the process of setting up a Debt Management Plan. Our staff has years of experience negotiating on behalf of our clients and will sought to get you the best possible repayment figure. If you would like a free call back contact us here.
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