What is a debt management plan?
Simply put, a Debt Management Plan is an agreement that is made between you and anyone you owe money to; your creditors.
The main benefit is that the agreement will allow for a smaller amount to be paid each month, rather than the full amount as determined by the original terms and conditions of the credit when you first took it.
A Debt Management Plan doesn’t reduce the amount you have to pay back, although as part of the agreement, the creditors can agree to reduce or even waive further interest charges. Eventually you will repay everything that you owe, however it will take longer than you had originally intended.
Not all debts can be included in a Debt Management Plan. There are many significant exclusions such as:
- Overdue payments to HRMC such as Income Tax or VAT
- TV License costs
- Overdue bills for gas, electricity, child support, council tax, or rent
- Fines imposed by a Magistrates Court
