Debt Management Plans for Couples

 

You and your partner can act jointly to deal with mutual debt worries.

 

It’s common for couples to enter a joint debt management plan when it’s the best debt solution available.

 

This debt solution could help you to steadily repay your debts at a rate that you can afford.

 

Debt Management Plan

 

A debt management plan is an informal and flexible type of debt solution.

 

It isn’t a type of personal insolvency and therefore your assets (like a jointly owned home) aren’t taken into account.

 

Entering this debt solution together will help you to budget for your household bills and other important expenses.

 

Joint Debts

 

There’s no requirement to have a joint debt in order to qualify for a joint DMP. You can each include your individual debts into a single repayment plan.

 

If you do have a joint debt you can work towards clearing it together.

 

If you have a joint debt but only one of you enters a DMP the scenario is different. The lender can still request full repayment from the other borrower even if they’ve accepted a reduced payment via your DMP.

 

Joint Assets

 

A key advantage of debt management plans is that they do not take your assets into account.

 

This is different to personal insolvencies like an IVA, debt relief order, or bankruptcy.

 

For joint homeowners with significant equity in their property a debt management plan is often the best debt solution.

 

It’s important to remember that a DMP (unlike some other debt solutions) provides no formal legal protection from creditors.

 

Just for Couples?

 

Joint debt management plans are primarily used by couples who cohabit. There is no requirement to be married.

 

In theory non-couples who cohabit and who are financially interdependent could also proceed with a joint debt management arrangement.

 

Couples can also choose to each enter an individual debt management plan if they prefer, but this might increase costs and administrative work.

 

Separation During DMP

 

If you separate during your DMP you’ll want to review your debt management options again. A DMP may no longer be the best debt solution for either of you.

 

A joint plan could be split into two separate plans if you can both still afford to make a regular payment.

 

Each Using A Different Debt Solution

 

A joint solution isn’t always be the best debt management choice for couples.

 

Your household might get debt-free sooner (and at a lower overall cost) if you each enter a different type of debt solution.

 

A good debt adviser will identify options for each of you on an individual basis as well as jointly.

 

Alternative Debt Solutions

 

Debt management plans are the best-known debt solution that is available throughout the UK.

 

Debt consolidation is also available throughout the UK. Consolidating debt into a single new loan is perceived to be risky so it’s advised that you get debt advice before completing a loan application.

 

For couples who are resident in England, Wales, and Northern Ireland your alternative debt solutions include:

 

An IVA helps couples to reduce their monthly debt repayment and look forward to part of their debt being written off in the future. A couple can coordinate this debt solution via two interlocking IVAs.

 

A debt relief order (DRO) helps people with few assets, low surplus income, and total debts of £20,000 or less. A DRO can only be used individually and couples each need to pay their own application fee.

 

Bankruptcy can be appropriate to deal with serious debt problems but serious issues can arise if you own assets such as your home. It can only be used individually and couples each need to pay their own application fee.

 

For couples who are resident in Scotland your alternative debt solutions include:

 

Scottish trust deeds help couples to reduce their monthly debt repayment and look forward to part of their debt being written off in the future. This is an individual debt solution but couples can receive coordinated debt advice and trust deed services.

 

Bankruptcy can be appropriate to deal with serious debt problems but serious issues can arise if you own assets such as your home. It can only be used individually and couples each need to pay their own application fee.

 

The Debt Arrangement Scheme may be a better option than debt management for Scottish residents. It guarantees frozen interest and legal protection from creditors. It is possible to enter a joint Debt Arrangement Scheme with your partner.

 

Getting Debt Management Advice

 

For expert debt management advice please contact us.

 

We’ve been helping couples to deal with their debts since 2007. Our friendly and experienced advisers will be very pleased to assist you.

 

 

Author: Andrew Graveson

Qualified Debt Adviser & Bright Oak’s Founder

 

Page Last Updated: 07/07/2020

 

 

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