Debt Management Plan | Guide

Can anyone have a Debt Management Plan?

A Debt Management Plan is only suitable if you can’t afford to meet your regular unsecured debt repayments.

A Debt Management Plan won't be able to help you if you only have secured debts (like a mortgage or secured loan) or you can’t commit to regular (smaller) monthly payments – it’s best to speak to a debt expert about your individual circumstances as they’ll be able to advise whether a Debt Management Plan is a suitable debt solution for you.

A Debt Management Plan won't be the right solution for you if:

  • there's no way you can commit to regular (smaller) monthly payments, or
  • there's no way you can repay what you owe in a realistic timeframe, or
  • you can still afford the payments you first agreed to make.

Do I need the Debt Advisory Centre to help me?

No. If you are confident enough to contact the people you owe money to and negotiate directly, there’s nothing stopping you and you don’t need to use the Debt Advisory Centre or any other Debt Management company.

However, experienced debt advisors can negotiate on your behalf and will ask your unsecured lenders to accept lower monthly payments and freeze interest. Plus, many Debt Management companies have good working relationships with the lenders they are trying to negotiate with, so may be more likely to get the desired outcome.

If you do negotiate with your lenders directly, without the help of a Debt Management company, you’ll be dealing with multiple lenders, who may want payments at different times of the month, so you’ll need to make sure you keep on top of all of them. A Debt Management company can do this for you and you will just have to make a single, affordable monthly payment to them. They’ll then distribute this amongst your lenders.

Fees are chargeable for our services. To find out more, take a look at our Fees page here

How do I start a Debt Management Plan?

You can negotiate a Debt Management Plan directly with your lenders, or there are free advice organisations, such as the Money Advice Service who can help, or a Debt Management company, like the Debt Advisory Centre can help too.

Often people come to us because they are worried about their debt and need a bit of help to get back in control of the situation – that’s what we’re here for. We won’t judge you, we’re here to listen and help you understand what your options are. What’s important is that you are now taking control again.

Everything you tell us is completely confidential and we don’t pass your details on to anyone else (except to your lenders if you ask us to manage your Plan for you).

We'll start by getting a good understanding of your individual circumstances to get a clear picture of your situation. Once we’ve got a good understanding, we’ll be able to advise whether a Debt Management Plan could be the right solution for you, or if there are any other, more suitable, options.

How much will I repay on a Debt Management Plan each month?

That depends. The idea of Debt Management Plan is that you pay only what you can afford towards your unsecured debts, so it's different for every person. Your new payments will be based on the amount left over after you've paid for all your essential living costs, such as rent or mortgage, utility bills, travel and food.

And don’t worry if your circumstances change while you are on the Debt Management Plan: it will be reviewed regularly with you to ensure the solution continues to be the most suitable one for you. So, for example, if you end up earning less than you did when you started your Debt Management Plan, it can be altered to suit your new finances.

How long does a Debt Management Plan last?

That also depends. A Debt Management Plan lasts as long as it needs to, provided you and your lenders are satisfied with the way it's working. The whole idea is that it enables you to repay your unsecured debts at a pace you can manage and within a reasonable timescale.

Just keep in mind that because your monthly payments will be lower, it could take longer to repay your debts. How long it actually takes will depend on how much you owe and how much you can afford to repay every month.

Can it help me with all my debts?

A Debt Management Plan only reduces your unsecured debt repayments, although it's designed to ensure you can afford your other living costs, including your priority secured debt repayments, your mortgage, rent, food, utility bills, travel costs and so on. If you have secured debts, they can’t be included on your Plan, but they will be accounted for to ensure you can continue to pay them separately.

What happens if my income decreases or my living costs increase?

It's important to talk to your debt advisor as soon as you can if your situation changes. They will speak to you to get a good understanding your new financial position and suggest the most appropriate course of action.

What happens if my income increases or my circumstances improve?

If you find yourself able to pay more than the amount you agreed to on the original Plan, speak to your debt advisor. The Plan is designed to help you for as long as you need it, so if your income increases, it should mean that you may become debt free sooner or you may no longer require a debt solution at all.

Did you find this useful? Share it with others!

Back to top

Further advice & support...