What should I do next?
Before you make a decision about your finances, make sure you’re fully informed about your options. Take a look at these resources:
Debt Management Plans are agreements between you and your creditors that enable you to pay all of your debts.
Debt Management Plans are usually used if:
You can either arrange a plan yourself or use a licensed debt management company for a fee. If you use a company, you must make regular payments to them and they’ll share the money between your creditors.
To find out if a Debt Management Plan is right for you, go to the Money Advice Service for more information.
You can either set up your Debt Management Plan yourself or contact a debt management company to help you with this.
Ensure that the company is associated with the Financial Conduct Authority (FCA) by searching the Financial Services Register to make sure they’re authorised to help you.
You will have to give them details about your financial situation (e.g. your assets, debts, income and creditors). They will then help you work out how much you can pay each month.
The company will contact your creditors and ask them to agree to the plan – remember, creditors do not have to do this.
Unless stated in the agreement, your creditors can still ask you to pay your debt in full at a later debt and take action to recover their money, even if you keep up with your payments.
Please note that your plan can be cancelled if you don’t keep up your repayments.
If you use a company to handle your Debt Management Plan, there are some associated costs.
These include an initial set-up fee and a handling fee for each time you make a payment.
You should be aware of these costs before you enter an agreement, and work out how you’ll pay for it before the debt management company approaches your creditors.
Debt Management Plans can only be used to pay ‘unsecured’ debts. This means that it only works for debts that haven’t been guaranteed against your property.