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Do I qualify for a Debt Management Plan?

Thu 14th June 2012

Debt Management Plans are one of the most popular ways in which people in the UK solve their financial problems. They are a way of rearranging your debt repayments to be more affordable to your circumstances. In this way you can continue to repay what you owe while still having enough left over to live on each month.

What are the qualifying criteria for a Debt Management Plan (DMP)?

Although there are no fixed criteria, generally to be eligible for a Debt Management Plan you will need to -

Be unable to keep up with your current debt repayments

You will need to demonstrate that your repayments are unaffordable based on your income and essential outgoings. In other words your creditors will need to be convinced that you cannot realistically pay the originally agreed amount and that a reduction in payments is best for both parties.

Have unsecured debt such as personal loans, credit cards and store cards

Only unsecured debt can be included in a DMP. Therefore if the money you owe is only made up of secured loans, such as a mortgage, then a Debt Management Plan won't be able to help you.  

Be able to continue repaying at least some of your debt each month

In a DMP you will still be required to make payments each month and so you will need to have the funds available to do so. The amount you pay should also be sufficiently high enough for the debts to be repaid in a reasonable amount of time.

Have creditors that will agree to a change in your repayments

Although the majority of creditors will negotiate on debt repayments it isn't guaranteed and so you will need creditors that will look on your request favourably. Separate lenders will have varying rules on what they are prepared to accept with some being more strict than others.

What can I do if I don't qualify for a Debt Management Plan?

Debt Management Plans are just one of serveral personal debt solutions available to people in the UK. If you aren't eligible for a DMP or if it isn't the best option for you then there are a number of alternatives.

These alternatives include -

Individual Voluntary Arrangements (IVAs)

Bankruptcy

Administration Orders

Debt Relief Orders

The best way for you to clear your debts, whether that be a DMP or one of these other options, will depend on your own unique circumstances. The amount you owe, your employment status, disposable income and assets are all factors that need to be taken into account.

Debt Management Advice and Services

Royal Exchange provides impartial debt help and advice to individuals throughout the UK. Our counsellors can advise on all debt solutions and assist whatever your financial situation.

To find out if you qualify for a Debt Management Plan and for answers to any other questions you have about solving your debt problems call us today on 0800 028 4422. Alternatively fill in the enquiry form and one of our advisors will call you back.

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