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Debt Management Plans (DMPs) provide a solution to many people who are struggling to keep up with their debt repayments. They are a way to lower your repayments so that you continue to repay your debts but at a more affordable rate.
DMPs are most commonly seen as a solution to consumer debts however if you are self-employed there is no reason why you can't apply for a debt management plan.
To do so you will need to have enough income to be able to continue repaying at least some of your debts each month. You will also need to convince your creditors that you can no longer keep up with the existing arrangement. Many creditors are prepared to negotiate providing that they are assured that you are paying as much as you can reasonably afford and that the debt will eventually be paid off.
Debt Management Plans and money owed to suppliers
Money owed to your suppliers can be included in a debt management plan providing of course that they agree to it. It should be remembered however that there is no guarantee that they will accept changes to your repayments. Even if they do agree to the DMP you may still find that they refuse to continue providing you with goods and services or may instead insist on being paid up front.
Debt Management Plans and tax debts
A downside of debt management plans is that tax debts such as VAT arrears can't be included. Any money owed to HMRC is seen as a priority debt and so changes to repayments will need to be negotiated separately. If you have these types of debt then you may instead want to consider an Individual Voluntary Arrangement.
For self employed individuals distinguishing between personal and business finances can make arranging a debt management plan a more complex process. It is therefore best to speak to a professional advisor who can help you to find the most appropriate solution for your own unique circumstances.
Royal Exchange provides debt management advice and services throughout the UK. Our experienced debt counsellors are on hand to provide sympathetic and confidential advice whatever your financial situation.
To find out more about how you can solve your debt problems call us today on freephone 0800 028 4422 or complete our contact us form and one of our advisors will call you back.Back to articles