Debt Management | Sole Trader Debt

What is a Debt Management Plan?

If you are a Sole Trader and you are struggling to keep up with Debt repayments, entering into a Debt Management Plan could save your business and sort out your debt problems. A Debt Management Plan is an Informal Agreement between you and your creditors where you agree to pay back your debts at a monthly rate that is affordable for you.
The Debt Management plan is a flexible payment plan that allows you to repay your debts in one flexible monthly payment. The repayments are then paid out to your creditors on a pro rata basis. You can arrange a debt management plan yourself but it is probably a better idea to use a Debt Management Company like McCambridge Duffy who will be responsible for all correspondence and payments between you and your creditors, which means you will not have to have any contact with your creditors at all.

Because a Debt Management Plan is an informal agreement you or your creditors can opt out of it at any time, this leaves the arrangement open for either party to pull out and if you are not sticking to the payment plan then your creditors can pull out and once again pursue you for all the money you owe them. You can use the debt management plan as a temporary debt solution until you get back on your feet financially and your business is no longer at threat, or you can aim to have it as a more long term debt solution.

How do I arrange a DMP as a Sole Trader?

When you call McCambridge Duffy to enquire about a Debt Management Plan we will determine whether or not a Debt Management Plan is the most suitable Debt Solution for you, your business and your circumstances. We will do a detailed analysis of your incomings and outgoings (daily living expenses) in order to determine what the best monthly payment would be for you to your creditors if you were to enter into a Debt Management Plan. The payments are then negotiated with your creditors and the Debt Management Plan is set in place.

Benefits of a Debt Management Plan

• An Informal agreement that can be stopped at any time as your circumstances change (for better or worse).
• Interest & Charges could be frozen if creditors agree.
• Creditor pressure eased as they deal with us.
• 1 easy monthly payment to cover all unsecured debts.
• A debt management company will negotiate with creditors on your behalf, so offers are more likely to be accepted and interest frozen than if you try to do this yourself.
• A debt management company will help you prepare your plan, including agreeing the level of your household and personal spending based on guidelines, which can then be used to put your case to the creditors.

Disadvantages of a Debt Management Plan

• Can remain on credit file for sometime after completion if a default notice has been issued.
• If your creditors refuse to freeze or reduce interest this can lead to increased debt level as repayments are less than original contractual payments. Any further collection actions may incur costs that will normally be added to the debt
• Debts will be repaid over a longer period of time than if contractual payments were made.
• You will repay debts until they are paid in full
• Repaying 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 to long term.