Debt Solutions - Debt Management Plan

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A Debt Management Plan is an informal agreement between you and your creditors. A debt management company will take a close look at your financial situation and communicate with your creditors to agree on one affordable monthly payment. This one payment is divided among your creditors and will cover all your debt.

If you are interested in setting up a Debt Management Plan, or just want to know more, get in touch with me for professional debt support.

A Debt Management Plan would usually be used when either:

• You can only afford to pay creditors a small amount of what is owed each month
• You have temporary debt problems but will be in a better position to make your repayments within a few months

There are two ways:

• You can arrange a plan with your creditors yourself
• You can arrange a plan with your creditors through a licensed debt management plan provider

If you go for the second option, you will make regular payments to the provider, and they will share these payments out between your creditors once any monthly fees owed to that company are deducted. If your financial situation changes, so can your plan, resulting in reduced payments that suit you.

• Individual Voluntary Agreement (IVA) – an agreement with your creditors to pay all or part of your debts. This is where a person agrees to make regular payments to an Insolvency Practitioner, who then divides the money between the person’s creditors. This option gives people more control over their assets than bankruptcy, Individual Voluntary Agreement (IVA) information. <<more info>>

• Debt Management Plan (DMP) – The difference between a DMP and an IVA is that with a DMP, all outstanding debt is repaid. It’s a much more informal solution and therefore, there is no guarantee that interest and charges will be frozen by creditors. It’s also true that creditors can still pursue legal action, whereas, with a legally binding IVA, no changes can be made to an approved agreement. Debt Management Plan (DMP) information. <<more info>>

• Bankruptcy – Bankruptcy presents the opportunity to clear debts and go for a ‘fresh start’ but there are many consequences which must be considered before declaring bankruptcy. Citizen’s Advice covers this in more detail, including timelines, checklists, costs, and implications at, Bankruptcy information. <<more info>>

• Debt Relief Order (DRO) – This presents people with a way of dealing with their debts if they can’t afford to pay them. It is usually granted for 12 months and means a person doesn’t have to pay certain types of debts during that period of time. AN authorised debt advisor, who acts as the intermediary is the only route available for people looking to obtain a DRO. Debt Relief Order (DRO) information. <<more info>>

• Scottish Protected Trust Deed (TD) – A Protected Trust Deed is only available to residents of Scotland and presents an opportunity for people to remain in possession of their home (in most cases). This formal but voluntary agreement is overseen by the Accountant in Bankruptcy, Scottish Protected Trust Deed (TD) information. <<more info>>

• Scottish Debt Arrangement Scheme (DAS) – This scheme was set up by the Scottish Government to allow people an opportunity to pay back their debts without the threat of court action. The DAS presents people with a manageable way of paying back their debts and is eligible for application from people with any amount of debt. Scottish Debt Arrangement Scheme (DAS) information about applying for a DAS. <<more info>>