Debt Management Plans

What is a Debt Management Plan?

Where necessary, debt management is offered in the form of a Debt Management ‘plan’ which allows the client to repay what they can afford to their creditors on a monthly basis. This is a repayment plan that allows the client to repay their debts in descending order, according to how much money is owed to each creditor; for example, the more the client owes to a creditor, the more they pay on a monthly basis out of their budget negotiated through the debt management company. This is distributed to creditors in document form in a ‘Financial Assessment’.

Debt Management Companies

Debt Management Plans are distributed by Debt Management Companies, some charge a fee which is taken from the client’s budget, sometimes a ‘set-up fee’ is charged, however, some are free of charge: examples of free Debt Management Companies below:

  •      CCCS (Consumer Credit Counselling Service)

  •      Payplan

  •     CAB (Citizen’s Advice Bureau)

  •     Christians Against Poverty

  •     National Debt Line

How Do Debt Management Plans help?

Debt management plans allow the client to pay smaller, more manageable payments to each creditor through a lump sum they pay the Debt Management Company, when an arrangement has been reached with a creditor, they may be able to freeze or reduce the interest owed depending on the financial product.

Financial Assessments

The financial assessment is a breakdown which assesses income and expenditure. Monthly income and expenditure is recorded, along with the total amount the client owes in debt and a list of the affected creditors.

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For more information on:

  • Priority Debts
  • Consumer Credit Act 2006
  • Default Notices
  • Debt management and Charge-offs
  • Full and Final Settlement offers
  • How will my credit file be affected if I enter into a Debt Management Plan?