A debt management plan is what’s known as an informal debt solution, this means that there are no legal processes involved. Basically, you contact your creditors and agree to repay at a rate you can afford. Whilst we obviously recommend having a professional do this for you, it is certainly something that you can, if you wish, take on yourself. Creating a debt management plan that is agreed to by your creditors can be a time consuming exercise with lots of correspondence.
Statement of affairs
First of all, you must create a statement of affairs to send to all of your creditors. This is your ‘note of financial standing’ and should show all of your income and expenditure, as well as any assets you may have. Make sure you are completely honest, as your creditors are likely to reject the proposal if not.
Get your balance
Contact your creditors and get a current, and accurate, balance.
A credit reference agency should be able to provide you with all the information you need.
If you use a paid credit reference agency make sure you cancel your account before you start getting charged (usually in the first month).
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In the letter asking for your balance, you should let your creditors know your situation. Why you are in debt and why you cannot pay it back. You need to be completely honest, but remember that you are not begging them, simply trying to get some sympathy from them.
Write back to all of your creditors with a pro rata (in proportion) payment offer. Only include what you can realistically afford.
Ask them to freeze any interest and charges on your account.
If your creditors agree to your payments, set up a direct debit to ensure that you never miss a payment.
Still unsure or want to know more?
That’s where our advisors come in, our expert debt advice team can help you find a solution that works for you. If you think a Debt Management Plan could be right for you, get in touch now.
At MoneyPlus we understand that every financial situation is different, and approach every customer with the care and individuality that they deserve.
So, get in touch today and start living better with MoneyPlus Advice.