Informal Debt Plans

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The Informal Personal Plan can sometimes be described as a Debt Management Plan. Most individuals who have debts in excess of £15,000 should be advised, if the situation warrants, that they consider an IVA (see IVA), but unfortunately, not everybody fits the criteria for an IVA, so a Personal Plan may be the only option unless bankruptcy is recommended.

Arranging a personal plan can be ideal if you are going through a short-term bad patch financially (lack of overtime etc). It will give you control of your finances until your situation improves allowing you to get back on track with your creditors.

It is an agreement between you and your creditors that can be made when you are in a position where you can no longer afford to make your unsecured debt repayments in full and/or when they fall due. However, you may be able to make a reduced offer of payment from any disposable income that you have. It does not involve any legal paperwork or court appearances.

This is a simple and effective way for you to pay your unsecured creditors. Your advisor will ask you a number of questions about your current financial position enabling him to calculate how much you can realistically afford to pay your creditors each month. The amount offered is called “Monthly Disposable Income (MDI). Your MDI will then be disbursed to your creditors.

This also means that instead of having to make separate payments to all your creditors or their representatives/appointed collectors you will have only one single payment to make and your advisor will manage and deal with your case.