If you are struggling with debt and trying to find a way to make your money go further each month, you may find a financial management plan is an option worth considering if you have some disposable income each month.
A financial management plan is an informal agreement with your creditors that does not involve going to court.
What is a financial management plan?
Sometimes called a ‘ debt management plan’ or ‘DMP”, a financial management plan is a way of rescheduling debt payments in to more affordable monthly payments.
Under the plan, you work out a detailed monthly budget that sets aside a fair monthly repayment off your unsecured debts.
The repayment is sent to a financial manager who then pays a share of the money to each creditor.
The budget will leave you and your household with enough money to pay priority bills, like rent or mortgage, council tax, utilities, food and travel to work.
Who can use a financial management plan?
Anyone with unsecured debts can consider a financial management plan - providing you have two or more debts and some disposable income left each month to make repayments.
Is there a minimum amount of debt?
No. The amount of debt is immaterial - it’s whether you have enough disposable income left each month to make a repayment
Working out how much you can pay off your debts
Add up your household income.
Make a list of priority expenses, like rent or mortgage, council tax, utilities, food and travel to work.
Take the total expenses from the total income to see how much disposable income you have.
Not all your outgoings will be essential expenses, so you may find speaking to a professional debt adviser helpful as they can help you work out the amounts more accurately.
How will a financial management plan affect my credit rating?
A financial management plan will not show on your credit record, but your monthly debt payments will be there as missed or reduced payments. You are also likely to pick up default notices on credit cards and loans.
Some lenders may ask credit reference companies to mark your file with the details oif you start a financial management plan.
Will a financial management plan work for me?
It’s difficult to say before working out the figures, but if you can afford to make regular monthly repayments towards your borrowing, then you might decide a financial management plan is for you.
Even if your creditors fail to agree the payments, the budget exercise is the first step towards looking at other debt solutions like individual voluntary arrangement (IVA) or bankruptcy.
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Notes to editors:
- Money Debt and Credit is one of the UK's fastest growing financial solution companies.
- The company was founded in 2006 on the belief that every client has the right to appropriate financial advice. Since then we've gone from strength to strength and have helped thousands of people with a variety of financial solutions.
- We offer a range of services including Financial Management Plans, IVA s, Loans, Mortgages, Full & Final Settlements, Bankruptcy, Investments and Pensions.
- Specialties: IVA s, Financial Management Plans, Loans, Mortgages, Trust Deeds, Full and Final Settlements, Bankruptcy
For more information or debt advice contact:
Money Debt and Credit
45 Clarendon Road, Watford, WD17 1SZ
Tel. 0800 16 999 46
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