Debt Management Help

Qualifying criteria for Debt Management

The following information is a basic summary of the main eligibility criteria.

• You can only include unsecured debts such as personal loans, credit cards and store cards in your Debt Management Plan (DMP).
  
  
• You must be able to substantiate that you are unable to pay your monthly unsecured credit repayments as and when they are due.
  
  
• Your unsecured debts must be distributed amongst at least 3 different credit organisations.
  
  
• Typically, your unsecured debt should be more than £3,000 and less than £15,000.
  
  
• You must have a disposable monthly income of £100 to repay your creditors.

Debt Management FAQs

Q:  Will a Debt Management Plan help me with my debts?

A: Yes, a Debt Management Plan will help you with your debts but as the new payments will be lower than your currently monthly instalment, it will take a longer period of time.

Q: Will my creditors agree to a Debt Management Plan?

A: This will depend on the negotiation powers of your debt management company. With this said, there are greater chances of your creditors agreeing, given the fact that they will, at the end of the day, get their money back. This is generally a better option than not getting any money should you be declared bankrupt.

Q: Do Debt Management Plans have legal sanction?

A: The disadvantage of a Debt Management Plan is that, unlike an IVA, it is not legally binding. These plans can best be described as "understandings" between the debtor and their creditors.

Q: What are the benefits of a Debt Management Plan over the alternatives?

A: One alternative is to declare bankruptcy. Once you declare bankruptcy, you’ll find it difficult to obtain services from banks, credit card companies and others. An IVA, the other option, can be a slightly intrusive in that you need to report any change in your financial situation to your Insolvency Practitioner. In the case of Debt Management Plans you can live your life the way you want so long as you regularly pay your monthly instalments.