UK Debt advice

How long will I have to pay a Debt Management Plan before I am debt free?

The UK Debt Advice Team can confirm that the length of your debt management plan depends on how much you pay per month and whether the creditors all accept the arrangement terms.

In theory you divide your total debts into what your monthly payment is and that if the amount of months you will have to pay. Please note that fees apply for debt management plans.

Debt management plans are subject to status. Conditions apply. Repaying the debt over a longer period may increase the total amount to be repaid.

Your ability to obtain credit will be affected in the short term and might be affected in the medium term. Fees are payable for debt management plans.

Please note that for consumers considering a debt management plan; that although the consumer may become debt free at the end of the debt management plan, the effect on their credit rating is likely to remain on file for 6 years.

If you are worried about your debts, try not to panic but do not ignore your problem. Talk to the people or organisations you owe money to and let them know that you are having problems. Most organisations will be more helpful if you approach them first.

If you have more than one outstanding debt, or have fallen behind in paying your bills, you need to work out which debts are priority debts. A priority debt is one that could have serious results if unpaid. Not paying your rent or mortgage would leave you homeless, or not paying your gas or electricity bill could leave you being cut off and taken to court. When you have decided which are priority debts, work out how much you can realistically afford to pay back.

You will need to think carefully before taking out further loans to pay off existing debts. You may end up paying back a lot more than you borrowed and the interest rates may be extremely high. Some loans can be secured against your home and you could end up losing it if you fail to make repayments. Check your income and see if there are any benefits or tax credits you are entitled to that you are not getting.

Look carefully at your spending and see if there is anything you are able to cut down on, again you can work out what are priority expenses and what things are not so necessary. You can also look at ways of reducing your outgoings, for example you could shop around for a cheaper gas or electricity provider, or look at cheaper mortgage or insurance providers. The UK debt advice Team are very targeted in their approach.

Listed below are some of the frequently asked questions on Debt Management Plans

• How do I know whether a Debt Management Plan is right for me?
• What are the advantages of a Debt Management Plan?
• What are the disadvantages of a Debt Management Plan?
• Is a Debt Management Plan a type of loan?
• How long will I have to pay a Debt Management Plan before I am debt free?
• How much does a Debt Management Plan cost?
• How much money will actually go to the companies I owe money to under a Debt Management Plan?
• How do I make the payments?
• If I have a change of circumstance can I stop the Debt Management Plan?
• Who tells the companies I owe money to that I am actually in a Debt Management Plan?
• Will the companies I owe money actually accept a a Debt Management Plan?
• How a will Debt Management Plan affect my credit status with Experian, Equifax and Callcredit, the three main credit reference agencies
• Will a Debt Management Plan stop all the companies that I owe money to constantly telephoning me and sending me letters?
• Will I receive a regular report to inform me that my debts are actually going down?
• After the Debt Management Plan is set will I receive be able to get any additional help and advice?
• After the Debt Management Plan is set up can I still use a credit card or apply for car finance if I budget for it?
• Once the Debt Management Plan has been set up does it mean that I will have to keep paying interest and bank charges?
• Can I include secured loans in a Debt Management Plan, such as car finance or mortgage?
• Can the companies that I owe money to threaten to take my house or flat once that I am in a Debt Management Plan?
• Can I include all my debts in  a Debt Management Plan?
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