FAQ about Debt Management Plans (DMs)

Firstly we accurately assess your circumstances and make a provision for priority debts. If we establish that you cannot afford to meet minimum contractual payments, we will advise you on all appropriate options. If the debt management plan is the most suitable solution we will negotiate and agree a payment plan with your creditors. You will make one monthly affordable payment which we will distribute to creditors on your behalf on a “pro-rata” basis.

We have a dedicated team of debt advisors who will be there to aid and assist you through your debt management plan.

There are debts which are regarded as “priority” debts which include your mortgage, rent, utilities and council tax. You will continue to pay these each month and if there are arrears to priority creditors, we will make sure that your plan includes payments to clear the arrears. You can then increase your payment into your DM plan when your arrears are cleared.

Creditors and lenders do not have to accept our proposals. In our experience, the majority of our debt management plans are accepted by creditors and they do not resort to action. All you need to remember is to let us know immediately of any threatening calls or letters, or any legal documentation so we can guide you and help you take action appropriately.  If it becomes apparent that creditors are looking to take action, it may be appropriate to consider a formal debt solution such as an IVA or bankruptcy.

This is possible; however, the payments will be affordable every month. The creditors are not obliged to accept your offer of repayment through this plan or freeze interest and charges, and if they do not, it may take longer and cost more for you to repay the creditors in full due to the possibility of additional fees and charges.

It is highly likely that your creditors would withdraw their support of the plan and may commence legal proceedings.

A DMP is an informal solution so there is no legal obligation on creditors to stop contact or freeze interest and changes, however in the vast majority of cases, we manage to achieve this with them.

You can if you wish; however, there are a few factors to consider. Dealing with your creditors can be a time-consuming and stressful process, which requires you to maintain regular contact with them, therefore the service that we provide takes this pressure away from you. We are here to ensure your solution is appropriate for you and managed effectively, up until your debts have been cleared or an alternative solution becomes more appropriate for you.

You are paying for a professional service and employing our skills and expertise. The set-up fee you pay covers the work we undertake to set up your plan, which includes drafting your debt management plan, sending this out to creditors, liaising with creditors to gain their acceptance of the plan and dealing with creditor’s queries.  The management fee covers the following: conducting 6 monthly reviews, a dedicated team of advisors to help you with any queries, handling any letters or emails you may receive, ongoing negotiations with your creditors to ensure your plan runs smoothly, handling letters, e-mails and phone calls from your creditors, distributing your monthly payment to your creditors, assistance with legal action that may be taken by your creditors, and our Customer Portal available to you 

There is a 14 day “cooling off” period from the date you accept The Agreement Terms. If you decide to not continue with the plan within the first 14 days, we will refund your payment, unless a distribution has already been made to your creditors.

We review your plan every 6 months and take into account any changes in your circumstances. If your situation changes in any way, we would ask you to contact us immediately. If your situation has worsened we will write to your creditors to negotiate a new affordable repayment plan, or discuss an alternative solution with you.

Each plan is individual to each customer’s financial circumstances. Due to the fact you are paying less than the original contracted payment to each creditor, the term to repay the debt will be longer but the repayments are more affordable.

You may have to pay £50 to apply for a variation order. This is a charge levied by the court none of which is retained by The Debt Advisor Ltd.

If you are already in employment, your employer may decide to perform a credit check. This could reveal that you currently have an arrangement with your creditors; generally, it is unlikely to affect your employment.

If you are seeking new employment, there are some organisations that perform a credit check as part of the recruitment process to establish whether or not you are having financial difficulties. This check will not necessarily affect your chances of employment.

Employers must obtain your permission to perform a credit check.

All debt solutions should be very carefully considered. Fees will be charged if a solution is taken in order for us to set up your plan and maintain it – all fees will be outlined during your consultation. Retained payment may place you further into arrears. You have the right to a cooling off period of 14 days. It is likely that your ability to obtain further credit in the short term will be affected and this may also be the case over the medium to long term. 

The Insolvency Service website has helpful information at https://www.gov.uk/options-for-paying-off-your-debts/overview to support those who find themselves in financial difficulty.

There are sources of free debt advice and services. You can find out more by contacting the Money Helper Website.