Debt Management

What is Debt Management?

Debt management is a debt solution allowing you to consolidate debt in to one affordable payment without further borrowing.

You make one affordable payment to the debt management company, who distributes it between your creditors. The level of the reduced payments depends upon individual circumstances.

How debt management works

The debt management company (us) takes a financial statement from you detailing your income and all necessary outgoings, included your credit repayments. If this shows contractual repayments exceed your disposable income, the debt management company uses this as evidence to your creditors that you can't afford such payment levels.

This works as under the 1974 consumer credit act, unsecured creditors can't ask you for more than your disposable income once reasonable essential living expenses have been taken into account.

Qualifying for a debt management plan

You will be eligible for a debt management plan / programme if you have at least 3 different creditors, can't afford current contractual repayments, but can afford at a minimum of £100 per month towards your debts.

Why Use Abacus Debt Management

Abacus advises on the full range of debt solutions, not just debt management. Therefore you can be assured that we will only recommend debt management if is the most appropriate solution for you. If your situation is best suited to an IVA, remortgage, debt consolidation loan, debt management plan or even just better budgeting, we will advise accordingly.

Debt Management Case Study

Debt: £58,000, Old Payments: £1,267, New Payments: £300
Client has £200,000 equity in his home, but unsecured debts of £58,000. His assets are greater than his debts, therefore he is not insolvent, however he can't afford to pay 11 creditors from an average month income of £1,060.
An IVA is not possible as his creditors would never agreed to forgive any debt when he could repay them in full by selling his propertyr. The client does not want to remortage as he has recently become self employed and does not want to risk his home if that does not go to plan. Debt management will never pay off this debt, but it gives client some respite from his creditors while he focus on building his business without the fear or court action or losing his property.
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