What is a Debt Management Plan?
A Debt Management Plan helps reduce your weekly or monthly debt payments so you can comfortably cover your essential living expenses and priority bills. Typically, you make a single payment each week or month, which is then distributed among your creditors based on the amounts you owe. If you choose a company like Curtis Faraday to manage the process for you, they’ll handle all the process on your behalf.
Advantages & Disadvantages of a Debt Management Plan
Advantages
- Just one affordable payment: Simplify your finances by combining everything into a single, manageable payment.
- Lower interest and charges: Benefit from reduced or frozen interest rates and fees, saving you more over time.
- Better budget control: Manage your income with ease and confidence.
- Fair treatment for all creditors: Ensure fairness across all parties involved.
- Clear timeline to debt freedom: Receive a structured plan for when you’ll become debt-free.
- Expert guidance: Gain support from experienced professionals every step of the way.
Disadvantages
- Creditors don’t have to accept: Creditors do not have to accept any debt management proposals.
- Credit score will be impacted: In most cases entering into a Debt Management Plan will have a negative impact on your credit score.
- Creditors do not have freeze interest and charges: By law creditors do not have to freeze interest or charges when you enter into a Debt Management Plan.
- It may take longer to clear your debts: Entering into a Debt Management Plan could extend the time you are paying the debts for.
- Further action: Creditors could take further action against you whilst you are on a Debt Management Plan.
- Potential Debt Write off. On a Debt Management Plan, you pay every penny back. No debt is legally written off.
What debts can be included in a Debt Management Plan?
- Credit cards
- Unsecured Loans
- Overdrafts
- Store Cards
- Catalogues
- Payday loans
- Hire Purchase agreements or finance (If you no longer have the goods)
- Disconnected utility bills
- Council tax arrears (in certain situations)
- Benefit overpayments (in certain situations)
- Mortgage Shortfalls
- County Court Judgments (CCJs) (in specific cases)
- Old business debts (in specific cases)
What debts can't be included in a Debt Management plan?
- Court Fines
- Criminal Fines
- TV Licence Debt
- Current Gas and Electric bills
- Child support arrears
- Mortgage and Secured Debts (if you still own the property)
- Hire purchase agreements (if you still own the goods)
Will a Debt Management Plan be accepted by my creditors?
While creditors are not required to accept a debt solution, they may agree to a Debt Management Plan if they believe it’s the most effective way to recover the money you owe. Curtis Faraday will present a fair and firm payment offer to your creditors, detailing the affordable monthly amount you can repay. We determine this amount by completing a thorough income and expenditure assessment with you. Your creditors might freeze interest and charges on your debts to give you some breathing room to organise your finances, but this is not guaranteed.
We can help you.
Financial difficulties can feel overwhelming, but you don’t have to face them alone. Our advisers are here to listen to your concerns and help you understand the debt solutions available to you.
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We know that debt is daunting, but after speaking with us, we can put together a personal action plan to put your mind at ease.
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Our team of experts help thousands of families every year across the UK get their finances back on track.
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To find out more about managing your money and getting free and impartial debt advice, visit www.moneyhelper.org.uk, an independent service set up to help people manage their money.
