“Thankfully it would appear that most of our creditors have now come to an agreement over the plan, and there has been a total cessation of phone calls, (which numbered up to twelve on average per day at their height)....I would like to thank you for your hard work on our behalf – I know we have presented one of your more “challenging” workloads."
(Mrs S – North-West England).

A debt management plan is a method for someone who cannot afford their current debt repayments to repay their creditors at an affordable rate.

Affordability is calculated by creating an “income and expenditure” budget. Priority is placed upon essentials such as mortgage/rent, council tax, utility bills, transport and general housekeeping expenditure. Allowances are also made for many other areas of expenditure (for example car servicing, haircuts, reasonable leisure activities and home repairs) that can easily be forgotten. It’s very important all expenditure areas are covered to make sure that the repayments that may be offered to creditors are sustainable.

The overall expenditure total is subtracted from the income total to find out how much is left. This amount is commonly known as “disposable income” and is the amount that is normally offered in total to repay creditors via the debt management plan.

The debt management company will then write to your creditors offering to repay the debts at this affordable rate. The amount offered is justified by providing the details of income and expenditure.

Each creditor is usually offered their fair share of the money available. The fair share is based on percentages and is known as a “pro rata” payment. If you owe 50% of your total debt to one credit card company this company will be offered 50% of your available payment.

You will then make this payment each month to the debt management company and they will distribute the payments to your creditors.

You can also direct any creditor contact received (e.g. letters) to the debt management company that you have employed for them to deal with.

“...thanks for all your help. We will recommend anyone else that we know with the same problems because the service from your team has been fantastic." (Mr J – North-East England)

Who can Debt Management Plans help?

How does the Debt Management Plan process work?

Will creditors accept a Debt Management Plan?