A Debt Management Plan is an agreement between you and your creditors to pay all of your debts. You make regular payments to a licensed debt management company. The company then shares this money out between your creditors.
The Money Advice Service has information on organisations that can advise you about whether a Debt Management Plan is right for you.
Get a Debt Management Plan
Only set up a plan with a company licensed by the Office of Fair Trading. Find a licensed debt management company.
The company works out your monthly payments. You’ll have to give details about your financial situation. For example, your assets, debts, income and creditors.
The company contacts your creditors and asks them to agree to the plan (they don’t have to).
Some companies will charge:
- a set up fee
- a handling fee each time you make a payment
Make sure you understand the costs of your plan.
Debt Management Plans can only be used to pay ‘unsecured’ debts – for example, debts that haven’t been guaranteed against your property.
Your plan can be cancelled if you don’t keep up your repayments.