As an informal arrangement, a Debt Management Plan is not legally binding on you or your creditors, however many creditors see a Debt Management Plan as a positive step towards resolving your financial difficulties.

Taking action to resolve your debt problems is often a difficult decision, but Debt Lifeboat's expert advisors can offer you free advice about the best course of action for you. Although Debt Lifeboat don't directly offer Debt Management Plans, we work with a number of well established providers to ensure that you get the best solution possible.

Credit Rating

If you have debt problems, the chances are that your credit rating has already been affected by negative data. If you have failed to maintain your payments and have thus breached your credit agreement, your creditor(s) may have already registered a default on your Credit Reference File.

Unless you settle your debt very quickly, a default will remain on your Credit Reference File for 6 years from the date of issue. Future lenders will see this and may reject any application on this basis since it shows an increased risk.

While a Debt Management Plan may not actually remove any defaults, your creditors will often record an Arrangement to Pay on your file. This can be viewed positively by lenders and help to improve your chances of getting credit in future.

Frozen Interest

Many lenders will freeze or reduce interest when you are in a Debt Management Plan. They often see a Debt Management Plan as a genuine effort to repay your debts and the fact that you have sought the assistance of a professional organisation helps to promote the impression that you are taking responsibility.

Managing Your Payments

Repayments are calculated based on your disposable income, i.e. what is left over after secured debts, normal household expenses and travel costs are deducted. Your disposable income is then used to calculate how long a Debt Management Plan will last.

Debt Lifeboat will refer your case to one of our strategic partners to handle your Debt Management Plan. If they charge fees, these will normally be taken as a percentage of your monthly payments, and the remainder will be distributed pro-rata to your creditors.

Change In Circumstances

If your circumstances change, for the better or worse, you must tell your case manager as soon as possible. Depending on the degree of change, it may be necessary to negotiate a revised payment plan with your creditors.