About Debt Management
Debt Management Plans have helped many people over the last 10 years or so and, in the right situation, they can provide the best outcome for both you and your creditors. Under an agreed plan you pay a fixed monthly amount which is based on what you can realistically afford to pay whilst your creditors, having accepted these terms, will no longer need to send chasing letters or make telephone calls to you.
Who is 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
What are the benefits of a Debt Management Plan?
In the right situation a Debt Management Plan can be very beneficial:
- You only pay what you can afford - all your credit cards, loan repayments and other unsecured debts are reduced to one single, affordable monthly payment
- The stress is removed - we deal with your creditors on your behalf, as well as any debt collectors or bailiffs
- Charges are reduced - we will seek to arrange with your creditors to freeze interest and other charges
- You have enough to pay your Priority Debts – we will make sure that the monthly amount you pay towards your debts leaves you with enough to pay Priority Debts, such as your mortgage or rent, Council Tax and utility bills
At Bridgewood we have a close working relationships with the creditor community, which can be of great benefit in ensuring that the solution we propose on your behalf is responded to quickly and in an appropriate manner. Whilst they are not obliged to, we will negotiate with your creditors to freeze or reduce the interest and charges on your accounts wherever possible.
How much will I pay?
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 at Bridgewood 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.
As you will appreciate, the work we do on your behalf is considerable and we therefore need to charge a fee for this work. At Bridgewood we pride ourselves on being able to offer amongst the lowest fees in the market, which means that your debts can be repaid sooner and your creditors get a fairer return as well. To find out more about our fees please see our Debt Management FAQs page or call us free.
When will my debts be repaid?
The length of time it will take to fully repay your debts will depend on how much you can afford to pay each month, but a typical Debt Management Plan will last for up to 5 years and sometimes longer.
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!
Learn more about Money Management
So what are the downsides?
A debt management is a big financial commitment that involves you moving away from the original repayment terms set out when you first borrowed the money. This means you will essentially have 'defaulted' on the debts - and this will be recorded on your credit history for six years after the default occurs, and could affect your ability to obtain credit in that time.
So if you are able to make your contractual repayments you should do so – a Debt Management Plan is only a solution for people who cannot meet their contractual repayments out of their current monthly income without also putting at risk other priority debts (such as mortgage repayments, utility bills, or Council Tax).
You should also note that a Debt Management Plan is an informal arrangement, so your creditors are under no obligation to accept the terms of a plan.
Find out about other Debt Solutions
Request a free callback from our expert Financial Consultants
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.
Request a free callback from one of our expert Financial Consultants
