These agreements serve as safety ropes, helping pull you out of danger before the debt becomes unmanageable. If you meet all the necessary criteria, a debt management plan could prove to be the best method in which to make repayments and get back on your feet.
What is an informal debt management plan?
In its simplest terms, an informal debt management plan is a series of deals struck with each of your creditors. Usually, it involves lowering the regular repayments and paying back your debts over a longer period of time. Your creditors will be asked to agree not to charge any further interest or add any more fees to your debt, in return for you agreeing to pay their debt by regular instalments.
Throughout the course of an informal debt management plan, your debts will be gradually repaid, helping you avoid the risk of having to sell your possessions. Informal debt management plans can only be administered by companies or organisations who are authorised by the Financial Conduct Authority.
Is an informal debt management plan my best option?
This course of action may be suitable for you if your unsecured debts are higher than £4,500 and the scheduled repayments are higher than you can afford.
Informal debt management plans are particularly useful if you’re being hit hard by interest/fees, as many creditors will agree that these costs can be frozen. It is worth noting, however, that each creditor is different, and some may insist on keeping these charges.
If your debt is nearing the five-figure mark, an informal debt management plan may not be viable as it will take too long to pay off the money you owe.
Find out more about debt management plans with Bennett Jones
Negotiating these types of plans with creditors can be daunting and complicated. If an informal debt management plan is something you may like to consider, the Bennett Jones team will be happy to provide you with information to help you choose a regulated company or charity that can administer the plan for you.
Get in touch today and take advantage of our insolvency knowledge, for free, by calling 0800 7710 073 or submitting your details via our online contact form.