You can negotiate with your creditors and manage the ongoing payments yourself or employ a third party debt management company to help you. 

This is because a debt management plan is not a legally binding agreement, you do not have to use a qualified solicitor or accountant to implement a DMP for you.

Whether you use a third party company or undertake a debt management plan yourself depends largely on personal preference.

The debt management process is made up of three stages:

1. Present a financial statement

Creditors will require a comprehensive statement of your financial circumstances so that they can understand why you are struggling to repay what you owe. This should normally include details of your income, expenditure, all of your debts and what you can afford to pay each creditor.

A copy of this statement and proposal of payment should be forwarded to each of your creditors.

2. Negotiate with creditors

Your creditors will react to your financial statement in different ways. Some will accept your offer of payment without any further comment and simply request that you start to make revised payments.

Other creditors will be less happy to agree and may want to argue for higher payments or will initially refuse to freeze further interest and late payment charges.

Generally negotiations with all of your creditors may take up to three months.

3. Maintain the agreed monthly payments

Once your creditors have accepted the reduced payment offer, your payments must be maintained.

If you miss payments because of bad management or because you cannot afford to pay what has been agreed, you risk your creditors restarting their interest and late payment charges and at worst rejecting the debt management plan all together and beginning their collection activities against you once again.  

For this reason it is very important that you accurately calculate what you can afford to pay each creditor during stage 1 and do not agree to pay more than you can afford in stage 2.

How to Start

Got a question? Why not use the Debt Management Forum which gives you direct online access to debt management experts

Call us now on 0800 077 6180 to discuss how a Debt Management Plan can solve your debt problem