A Debt Management Plan is a debt solution that can be used by all UK residents. Although it is an option for those living in Scotland, there are other solutions that may be more suitable for Scottish residents, which we’ll mention at the end of the guide.
A Debt Management Plan allows you to continue making payments towards your unsecured debts, whilst ensuring you are left with enough money for your essentials, such as your rent or mortgage, food, utilities, travel costs and so on. It involves offering your lenders new, lower payments that you can afford and are sustainable for you.
Your lenders aren’t obliged to accept less than the agreed payments but, as long as they can see that the proposed payments are fair to both them and you, it’s likely that they will. In most cases lenders will also agree to stop adding any further interest and charges to your account, but this isn’t guaranteed.
So, if you find yourself unable to keep up with payments for your unsecured debts, but can make a regular reduced payment towards them, and you think you’ll be able to repay everything you owe in a reasonable amount of time, a Debt Management Plan could be the right solution for you.
Once you’re on a Debt Management Plan, providing you keep up with the agreed payments, your creditors’ demand letters and calls should stop, and legal or recovery action should stop too, but this isn’t guaranteed.