Frequently asked Debt Management questions
- How does debt management
A debt management plan is an agreement with your unsecured lenders - we'll figure out together
what you can afford to pay each month and show them that accepting lower payments
is the best way they can help you repay the debt.
You'll make regular payment, and we'll pay each creditor a fair
amount, based on what you can afford and how much you owe.
Your regular payment will be based on what you can afford after all your priority
bills have been paid and your lower regular payments will be reflected on your credit
history. Regular payment will include our fee.
- Is debt management right
If you can't afford your monthly payments to your unsecured loans, debt management
could be just what you're looking for.
However, debt management won't be able to help you if:
- you only have secured debts (like a mortgage or secured loan), or
- there's no way you can commit to regular (smaller) monthly payments, or
- there's no way you can repay what you owe in a realistic timeframe, or
- you can still afford the payments you first agreed to make.
- How much will I pay?
That depends. The idea of debt management is that you pay only what you can afford
towards your unsecured debts, so it's different for every person.
Your new payments will be based on what's left over after you've paid for all your
essential living costs such as rent/mortgage, utility bills, travel and food.
To help you decide, one of our advisors can take a look at your finances and give you an
idea of how much you'd be likely to pay if you entered a debt management plan - and this
won't commit you to anything. If you have any questions, - you're always welcome to give us a call.
- Is debt management the
same as a debt consolidation loan?
Not at all.
A debt consolidation loan is what it says - a loan that you can use to repay your
debts. This is exactly what some borrowers are looking for, but it won't necessarily
help if you're in real trouble with your finances (or if you can't find a lender
who'll lend you money).
A debt management plan doesn't involve borrowing any more money. It's about repaying
what you already owe. On the other hand, like a debt consolidation loan it can reduce
your monthly payments and make it a lot easier to repay what you owe.
- Why would my lenders accept
They don't have to. However, as part of Think Money Group, we've been helping people with their debts since
1993, so we've built up excellent relationships with all the UK's major lenders. In our experience, they are often
willing to accept a debt management plan as a way of repaying debt.
- Which debts can you help
Your debt management plan can include all your unsecured debts: credit cards, store
cards, overdrafts, unsecured loans, etc.
Since your payments towards those debts will be lower on a debt management plan,
you should be able to afford all your other outgoings every month, from your mortgage
/ rent payment to things like insurance, petrol, food and so on.
Could a debt management plan help me?
If you can't afford to repay your unsecured debts as fast as you agreed to, a debt management
plan could be the best way for you to get out of debt. Talk to one of our advisors
and we can go over your finances together and find the right solution for you
If it looks like debt management is the best approach for you to take, we can talk
to your lenders. We can show them that you can't afford your payments as they stand
- but that you could afford to repay your debts if they accepted smaller payments
that don't take up money you need for things like rent / mortgage payments and
In other words, we'll do our best to show them that agreeing to those lower payments
really is the best option for them as well as for you. We'd also ask them to consider freezing
interest and charges on your debts.
How debt management works
Debt management can give you a chance to repay your debts more slowly, so you're
not stretching your finances too far every month.
We'll talk with your lenders and ask them to accept lower payments and to reduce
or freeze the interest and charges on your debts. We can't guarantee they'll agree
to this, but our priority is keeping your repayments affordable and working
with your lenders to ensure that as much as possible of each payment you make goes
towards reducing the balance.
Once your debt management plan has started, you'll make one payment to us every
month. This will be based on what you can afford alongside your other living costs,
such as bills. From this, we'll pass on an agreed amount to each of your lenders,
ensuring they each get a fair share. Our monthly fee will also come out of this payment, so
you don't have to worry about an additional bill.
We'll handle all the paperwork, letters and phone calls with your lenders. If you wish, you can tell them to - contact us if they have any concerns, rather than phoning you every time.
We'll review your plan regularly. If your circumstances change, our advisors will
be there to help you. For example, if it looks like you can't afford your debt management payments,
we can go back to your lenders and talk to them about accepting lower payments.
Likewise, if your situation improves, you can clear your debts sooner
by increasing your monthly payments.
Downsides of debt management
Although lenders often freeze interest and charges for people on debt management
plans, they don't actually have to. If they don't, you could end up paying more
in interest and charges in the long run, since your debts will take longer to repay.
Finally, joining a debt management plan means you're not repaying your debts
the way you said you would when you borrowed the money originally. This can affect your credit
Debt management advice
If you can't afford to pay the bills, drawing up a budget plan or changing energy tariffs could help save you some money. But if debt is causing the problems, you may want to look into debt management.
You could enter a debt management plan in Scotland - or you might opt for the 'Scottish-only' Debt Arrangement Scheme, set up by the Scottish government.
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