You and your partner can act together to tackle your household’s debt concerns. It’s common for couples to enter a joint debt management plan when this is a suitable debt solution.
Debt management plans work by reducing your total monthly debt repayment to an amount that you can afford. Your creditors are asked to accept a reduced level of payment and to suspend interest and charges on your debts. The debt management plan provider deals with your creditors for you and distributes payments to them on your behalf.
A DMP is not a formal personal insolvency, so your assets are unaffected and your name isn’t added to a public register. This debt solution is flexible, so your payment amount can change as your personal finances evolve in the future.
Bright Oak is a direct provider of joint debt management plans. For further information and advice please contact us.
• Make a single monthly payment
• Experts deal with your creditors
• Interest and charges often stop
• Flexible if your situation changes
• No public register
• Assets unaffected
• Damaged credit rating
• No guaranteed that interest/charges stop
• No formal legal protection
• Restricted personal expenditure
• No debt written off
• May be a long repayment term
There’s no requirement to have any joint debts together in order to qualify for a joint debt management plan. You can each include your individual debts into a single repayment plan.
If you have a joint debt but only one of you enters a DMP, the lender is very likely to continue requesting the full contractual repayment amount from the other borrower.
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 most suitable debt solution. It is however important to remember that a DMP (unlike some other debt solutions) provides no formal legal protection from your creditors.
Joint debt management plans are primarily used by couples who cohabit or who are 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 their own individual debt management plan, though this could result in increased administrative work and costs.
If you separate during your DMP, you should quickly review your debt solution options. A debt management plan may no longer be the most suitable debt solution for either (or both) of you. A joint plan can easily be split into two separate individual plans if you can both still afford a regular payment.
A joint debt solution isn’t always be the best option 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 both on an individual basis and a joint basis.
If you live in England, Wales, or Northern Ireland:
• 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 jointly via interlocking IVAs.
• A debt relief order (DRO) helps people with few assets, low surplus income, and total debts of £30,000 or less (£20,000 in Northern Ireland). A DRO can only be used individually and couples each need to pay their own application fee of £90.
• Bankruptcy can be appropriate to deal with severe debt problems, but serious issues can arise if you own assets such as a home or valuable vehicle. It can only be used individually and couples each need to pay their own application fee (£680 in England and Wales).
If you live in Scotland:
• 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 severe 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 a debt management plan 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.
If you moved abroad with UK debts:
• You can use a joint debt management plan and you may also still be able to use one of the statutory debt solutions described above. See our guide to managing UK debt after moving abroad for further information.
If your credit rating remains reasonable:
• Debt consolidation loans are available throughout the UK. Consolidating your debts into a single new loan can be effective if it reduces your total debt repayment to a genuinely affordable amount. Debt consolidation loans can be risky, especially if you subsequently build up new debts or if you secure the loan against your home.
In England & Wales you can suspend creditor legal action by using Breathing Space. The same benefit is achievable in Scotland via a moratorium. These schemes could provide you with legal protection from your creditors while you get debt advice and implement a suitable debt solution.
For friendly confidential debt advice please contact us. We have significant experience as an authorised direct provider of joint debt management plan services.
Author: Andrew Graveson
Qualified Debt Adviser & Bright Oak’s Founder
Page Last Updated: 04/07/2021