Debt Management Plans
Debt management plans are used to deal with unsecured debt, so mortgages or other secured loans cannot be included. However when a property in negative equity is sold, the resulting shortfall then becomes unsecured and could be included at this point. These plans are provided by debt management companies, who act on your behalf in dealing with creditors. They will contact all your creditors, provide them with details of your circumstances and negotiate an affordable monthly payment based on your disposable income. This payment will be subject to review and may change if your circumstances change.
In this type of arrangement your debt is not written off or reduced, you simply maintain payments until it is repaid in full. Your credit record may show that you are in a debt management plan, and this will affect your credit rating. The credit reference agencies retain this information on your report for a period of six years.