Debt Resources > Debt Solutions > Debt Management

May not be suitable in all circumstances. Fees apply. Your credit rating may be affected.

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Debt Management Plans In Scotland

Debt Management Plans are designed for Scottish residents who cannot afford to make the minimum payments towards their debts and are struggling to stay afloat financially.

They are classed as an informal arrangement which means it is not legally binding.

The basic outline for debt management plans is that you make one lower, affordable payment each month to your creditors and as part of an agreement.

Your creditors will agree to deal with your representative (your Debt Management Company) which reduces creditor contact.

Interest, fees and charges are sometimes frozen, allowing you to repay the debt faster.

How Do Debt Management Programmes Work?

A Debt Management Company will go through your income, expenditure and creditor details with you. They will then determine a more suitable monthly repayment figure for you which you must repay on time every month.

The company will contact all your creditors and set new arrangements in place.

But if they freeze the interest and charges, won’t they make any money?

They take into account that if they don’t help you with a plan, your situation may worsen and you could end up entering into a formal solution or even going bankrupt, in which case they would not receive anything. A Debt Management Plan helps creditors to recover the debt.

Is A Debt Management Plan Right For Me?

It all depends on your financial situation. If you are struggling to make minimum payments and even missing them on a monthly basis, Debt Management is definitely worth considering. If you fail to seek debt advice, your situation may worsen and you may fall victim to CCJ’s (County Court Judgments), Bankruptcy, or visits from Sheriff Officers.

What About Fees?

Most Debt Management companies will charge a fee for their services.

We recommend looking at reviews on Trustpilot before following through with a solution.

Will My Credit Score Be Damaged?

If you take out a Debt Management Plan, your credit rating will be affected until you complete the plan. You will still be able to obtain certain forms of credit. It will not be affected as much as if you had entered into a formal solution, which can hinder your ability to obtain further credit in the future.

Advantages of a Debt Management Plan

  • You’ll only pay what you can afford to your creditors
  • If you’ve fallen behind with your household bills you can add the arrears to your DMP to help get your accounts back up to date. You’ll still need to make your regular ongoing monthly payments.
  • Review your DMP regularly to make sure you’re paying what you can afford

Disadvantages of a Debt Management Plan

  • Some of your creditors may still contact you
  • Most creditors will agree to reduce or stop interest and charges, but they don’t have to
  • If creditors continue adding interest and charges, this could increase the total amount you currently owe
  • Your creditors don’t have to agree to your reduced payments
  • Your creditors may still take further court action against you, such as a County Court judgment (CCJ)
  • Reduced payments may lead to a longer arrangement term and could have a negative impact on your credit file

How Do I Find a Reputable Company?

It is important to check some information before dealing with any Debt Management Company, these are:

  • Make sure they have a Compliance Procedure
  • Ask the company if the calls are recorded and monitored
  • Don’t be afraid to ask questions, i.e. How many staff do you have? How long have you been trading? How many TrustPilot reviews do you have?

Debt Help Example

Example Debts

1 Personal loan £8,000
2 Credit card 1 £6,812
3 Council Tax £4,092
4 HMRC Debts £5,399
4 Overpayments £5,200
4 Overdraft £700
Total Owed £30,204

Your Monthly Repayments Could Be

Before £748
Unaffordable
After £295
Affordable
Reduced by
60%*
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