A financial management plan is an informal arrangement to repay debts you owe at a different rate than the agreed borrowing terms.
The aim is to give you breathing space to sort out your debts if you are struggling financially by paying less back a little less each month.
This doesn’t write-off the debt, you still pay back the full amount you owe, just at a reduced rate over a longer time.
For many borrowers, a financial management plan gives them the respite they need to recover from money problems, like a serious illness, redundancy or other disruptive life event.
A financial management plan involves no legally binding contracts and runs for no fixed time, although most courts and lenders regard the maximum ‘reasonable time’ to repay a debt as 10 years, the plan can last for much less time.
The plan covers unsecured debts – not mortgages or hire purchase agreements that involve your home, car or other expensive possessions.
All your unsecured debts are included, like credit cards, overdrafts, store cards and personal loans.
The idea is to work out how much money you have left after paying living costs and to share that fairly among your creditors according to the amount you owe each.
Leaving one out can undermine the plan as one creditor could complain you were unfairly treating another by paying them more than their fair share of your income.
Setting up a financial management plan is straightforward and usually takes just a few weeks.
Once the plan is up and running, letters and phone calls from debt collectors should stop. Your creditors can still take legal action like issuing defaults and applying for count court judgments, but generally, as long as you keep up your agreed payments, most will not take any action.
Some may request a financial review to make sure you are paying as much off their debt as you can afford.
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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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