Informal Debt Management Plan

An Informal Debt Management Plan is a non-legally binding debt solution for those who do not qualify for an Individual Voluntary Arrangement. The debts must be unsecured and you must be in a position whereby you cannot afford to meet the agreed monthly payments. You MUST have some disposable income once your priority payments (rent, mortgage, utilities, housekeeping, costs of travel etc) are met.

Informal Debt Management Plan Advantages include:

Creditors will often accept a lower payment over a longer period of time than that agreed initially when you have taken independent advice
Once the plan is in place you will not be under pressure (phone calls etc) from your creditors
The arrangement enables you to pay the debt back at a genuinely affordable amount each month
You only pay what you can afford based on the statement of affairs we prepare and present to your creditors
We will ask your creditors to freeze interest and charges. When they agree this stops the debt increasing
We will be acting on your behalf in most dealings with your creditors
You may cancel the agreement for us to act on your behalf at any time (we require that you let us know in writing immediately – we will inform the creditors that we are no longer working on your behalf)
You will pay only one monthly payment to us and we will pay your creditors on your behalf. The payments made are on a pro-rota basis – the creditor you owe the most to gets the highest percentage of your payment each month; the creditor you owe the least to gets the lowest percentage of your payment each month. This means all creditors are cleared at the same rate
You will remain in control of your assets (eg your home or a property you rent to tenants)
Once your budget is under control and your circumstances stable you may be able to move to an IVA (Individual Voluntary Arrangement)

Informal Debt Management Plan Disadvantages include:

Creditors are not obligated to freeze interest and charges. They may freeze interest for a limited period of time or charge interest at a reduced rate. This means that it is possible for the total debt to increase, particularly if your monthly payment is very low
Creditors can go to court and obtain a county court judgement, bankruptcy petition or attachment on property-equity etc in respect of its particular debt
Creditors do not have to accept your offer of reduced payments. If they do accept they are entitled to review your situation at anytime
Creditors may still issue a default notice which will show on your credit file
You will pay your creditors in full over a longer period than the initial agreed term
You may be required to pay greater contributions as time goes by (eg if you get a pay rise)
The term of the arrangement is not fixed

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