How will a debt plan affect my life?

If you’re feeling unsure about what life might look like while in a debt solution, you’re not alone – and you’ve already taken the first important step by exploring your options.

We’ve helped lots of people regain control over their finances – and we believe you should be able to live comfortably while sorting out your debts.

Here’s a breakdown of what you can expect from a debt plan and how it may affect different parts of your life.

Will my spending be restricted?

Yes – but only to a level that’s manageable. We’ll work with you to build a realistic budget that covers your day-to-day essentials, bills and a bit of breathing space. What’s left over becomes your monthly payment. You won’t be expected to cut everything – just to stick to what’s affordable.

We’ll review your budget with you every year, or sooner if your circumstances change.

Will my credit score be affected?

Yes.

Entering a debt solution will appear on your file for six years from the start date. If you’ve missed payments or defaulted, that will already be reflected on your credit file.

For DMPs, some creditors may mark your file with a flag or default, which will remain on your file for six years, whereas insolvency solutions like IVAs, DROs or bankruptcy will be listed on the Insolvency Register for three months after completion and on your credit report for six .

Will I still hear from my creditors?

In an insolvency solution, included in the plan are legally to stop contacting you about repayments once your plan’s approved. They must still send you certain communications such as annual statements, but they can’t chase you for payments or take legal action against you.

In a DMP, some contact might continue, but most creditors will reduce communication over time. We’ll deal with your creditors directly and help if you ever feel hassled.

Will a debt plan affect my tenancy?

If you’re renting, it’s unlikely your current tenancy will be affected, but always check your tenancy agreement first.

Will there be any impact on my home?

• DMPs and Repayment Arrangements – no legal protection from creditors, but your home isn’t at risk through the plan itself. However, creditors could still take legal action if payments aren’t maintained, which in some cases may affect your property.
• IVAs – your home is protected and you won’t be asked to remortgage. If your equity is under £10,000, your IVA will end after five years. If it’s over £10,000, your IVA will be extended by 12 months. Learn more about the equity clause.
• Bankruptcy and Sequestration – your home may be at risk if there’s equity.
• DROs and MAPs – you won’t be eligible for a DRO if you own a property.
• Trust Deeds – your home is protected and you won’t be asked to remortgage.
• DASs – if your DAS is approved, your property is protected.

Will it affect my current job or future career?

Most jobs aren’t affected, however if you work in finance, law, accountancy or hold a regulated role, you may need to disclose a debt solution. Your employment contract may explain what’s required and you can also check with your HR department.

Ready to take the next step?

Whether you’re just starting to explore your options or feel ready to take action, we’re here to help. Our advice is confidential and focused on what’s best for you.

Get debt help online or call us on 0800 316 1833 for a confidential conversation.