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 What is a debt management plan?
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With a debt management plan, your chosen debt management company will organise to restructure the payments that you make on your existing debts. You will not receive a loan, but you will pay an agreed amount to the debt management company, and they will distribute the money between your creditors.
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How can debt management affect my credit rating?
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When a debt planned is agreed between you and the creditor, any potential damage to your credit reference file is slight. Although your creditors can make reference to your credit file and the agreements on it, by organising reduced monthly payments you are actually protecting your credit file and is better than making late payments or being unable to pay them completely.
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Is anyone free to look at the credit register?
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No, The credit register contains private information, which only creditors who are member of the CAIS (Credit Account Information Sharing) are permitted to view. However, individuals can request copies of their own files. The main credit reference agencies are Experian, Equifax and Callcredit.
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If my interest payments are higher than my loan repayments, how will I ever repay my loan?
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If you deal with a professional, fee-free debt managing company and no other company is making a profit from your debt, many creditors will agree to freeze interest payments because you will been seen as making a legitimate effort to repay your debts.
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How do I know that I will be able to afford the monthly payments once they have been reduced?
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Any debt management programme is calculated based on the information you supply to them. This information includes income and essential outgoings so it is vital that you provide them with all the information that they request.
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How will my credit reference affect me getting a mortgage?
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This situation will depend on whether the debt management programme will become active before or after the mortgage is in place. If you decide to take out a mortgage once a debt management programme is active, it suggests to the mortgage lender someone who already has existing credit problems and may hinder the process of you being accepted for the mortgage.
If the debt management programme stopped between 6 and 9 months prior to the mortgage being taken out, it should not harm the mortgage application in any way.
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