Quick Guide to: Debt Management Plans

The One Advice quick guide to Debt Management Plans.

What is a Debt Management Plan?

A Debt Management Plan is a simple way to get your finances back in order. It is an informal agreement between the debtor and their creditors.

One Advice will help you work out how much you can afford to pay to your unsecured creditors each month, after all living expenses and priority debts have been deducted. You make one reduced monthly payment to us which we will distribute between your creditors.

Is a Debt Management Plan for me?

The best way to see if you are suitable for a debt management plan is to get in contact with one of our expert debt advisors via our freephone number – 0800 019 5870. They will go through your financial circumstances to see if a debt management plan is the right debt solution for you.

Typically our debt management clients have debts under £15,000 over 3 or more creditors. They are mostly employed and can commit to paying back a set amount each month.

Debt Management Plan Advantages

• Only make the payments that you can afford.
• Creditors are sometimes willing to freeze or reduce your interest and charges.
• Flexible payment plan that can change with your circumstances.
• Only one payment to make, no matter how many creditors you have.

Debt Management Plan Disadvantages

• Creditors are under no obligation to accept the debt management plan or to freeze your interest.
• There are some debts which cannot be included, such as student loan company debt.
• It will take you longer to repay your debt.

Are there alternatives?

There are other debt solutions besides a debt management plan. If you have over £15,000 worth of debt then you might want to consider an IVA. Unlike a Debt Management Plan, an IVA provides a certain amount of debt relief meaning that any unaffordable debt will be written off as part of your plan.

Entering into an IVA may adversely affect your credit rating for up to six years from the date of approval.

Your property will be protected within an IVA but you may be required to release all or part of any equity during the period of the arrangement.

Failure to complete the term of an IVA can result in bankruptcy.

(In Scotland, a PTD is the equivalent to an IVA.)