Debt management plan
|This article needs additional citations for verification. (April 2008)|
A debt management plan is a formal agreement between a debtor and creditor(s). Debt Management Plans help reduce outstanding, unsecured debts at a reduced level over a fixed period of time to help regain control of finances.
Debt Management Plans are individually tailored based on what can be realistically afforded on a monthly basis. To achieve an accurate figure, an income and expenditure test will establish what monies are coming into the household and what is paid out. Income and expenditure includes everything, such as rent/mortgage, secured loans, utility bills, and essential living expenses (food & car tax etc.). Once the income and expenditure is complete, the remaining amount is your disposable income which is then divided amongst creditors through a Debt Management company. This is done on a pro rata basis between creditors making payment equal based on the level of debt outstanding.
An alternative to Debt Management Plans is an IVA (see below link).
Debt Management Plans are run via FCA (Financial Conduct Authority) regulated control.
Creditors do not have to accept the offer put forward. Interest can still be charged despite the plan being in place. Consider an IVA as an alternative debt help plan
Insolvency Practitionerss can be found at R3 www.r3.org.uk www.fca.co.uk