How does a Debt Management Plan work

A Debt Management Plan is the process of restructuring your unsecured debt repayments to clear your debts as fast as possible, whilst still leaving you enough money to cover living expenses and priority debts (such as a mortgage)

When you contact us for debt help we will first perform a detailed income and expenditure review to establish what debts you have and what you can realistically afford to pay towards them each month.

If Debt Managment is a suitable solution we will then negotiate with your creditors on your behalf to accept lower monthly payments and to freeze your interest and payments. During the plan you will make a single payment to us each month which we will then distribute to your creditors

Who may be eligible for a Debt Management Plan?

You could be eligible for a Debt Management Plan in the following circumstances:

• You owe more than £5,000 of debts (either yourself or jointly with your partner)
• You have two or more creditors
• You can pay at least £100 each month towards your debts (in some cases less)
• You can provide proof of your income and the debts you have

How much will I pay?

Unlike the majority of commercial Debt Management companies, we do not charge any set-up fees.

The only fee we take is our on-going monthly fee, meaning your creditors begin receiving payments from the very start of your plan without interruption.

Our ongoing monthly fee

Our ongoing fee is 15% of each of your monthly payments and is subject to a minimum of £15 and maximum of £75

This is also one of the lowest monthly management fees in the industry, you can visit our fees page to find out more about our fees and how they comare to other commercial Debt Management Companies.

Your monthly payment

The amount you pay each month is based solely on what you can realistically afford. When you contract us, one of our Senior Financial Consultants will work through your current financial situation with you to identify what you can realistically pay each month towards your debts.

We use approved guidelines to calculate what you need in order to pay your household bills and other living expenses – this way we are able to demonstrate to your creditors that what you are offering to pay is genuinely all you can afford.

As long as your creditors see that your payment offer is reasonable - and we'll deal with all the negotiations for you - there's a good chance they'll accept lower payments. Whilst there is no guarantee, we’ll also seek their acceptance to stop charging interest or fees on your debts, which means that your debt burden won’t grow.

Pros and cons of a Debt Management Plan

Debt Management Pros

Debt Management Cons

A common practice that is widely understood by creditors We prepare the plan for you, based on what you can realistically aford to pay toward your debts each month We negotiate with creditors on your behalf meaning its more likely that offers will be accepted, and interest and charges frozen You payments may be able to be altered if your circumstances change You make only a single monthly payment each month, and we distribute this to your creditors within 5 working days Your plan ensures you have enough to pay your Priority Debts such as your mortgage or rent, Council Tax and utility bills There is no public record of your debt management plan, meaning your friends and family do not need to find out if you do not wish them to

Creditors do not have to accept our proposal, or freeze any interest and charges You remain liable for all of your debts until they are fully repaid A DMP is not legally binding meaning creditors are free to take enforcement action against you if they wish. Example this include them contacting you directly for payment, or applying for a CCJ against you. Creditors have no obligation to accept lower monthly payments if your circumstances change and you can no longer afford to keep up the plan Your credit file may be marked with default notices You ability to obtain further credit may be affected

When will my debts be repaid?

The length of time it will take to fully repay your debts will depend on how much debt you have and what you can afford towards it pay each month. A typical Debt Management Plan will last for 5 years or more.

If we recommend a Debt Management Plan as being a suitable solution to your debts we will give you an estimate of how long the plan will last, based on the amount you are commiting to repay each month. It should however be noted that in the event that your creditors do not agree to freeze interest and charges, repaying your debts over a longer period is likely increase the total amount to be repaid

On-going support and services

At Bridgewood we are committed to helping you make the most of your financial situation. This means we will support you in finding ways to increase the amount of disposable income you have each month via our Money Management Services:

• Increase your monthly income - we will use our specialist knowledge to identify additional benefits or tax credits you may be entitled to
• Reduce your outgoings - we have partnered with a number of specialist companies and will work with you to help you reduce your monthly bills (gas, electricity, telephone, insurance)
• Get Affordable Banking - we have partnered with Secure Trust Bank plc to offer a Current Bank Account designed to give you the finance support you need, including a MasterCard® prepaid card

The more we can help you save on your household expenses, the quicker you can be debt free!

Useful Links

• Find out about other Debt Solutions
• Insolvency Service Guide - In Debt? Dealing With Your Creditors
• Benefits Checker

Debt Management Plans are subject to status, and conditions apply. Whilst it may be the best solution in the long term, you should note that repaying debt over a longer period may increase the total amount to be repaid. Your ability to obtain credit in the future will also be affected. Fees are payable on this service.