Debt management Frequently Asked Questions

Here are the answers to the most frequently asked questions about debt management. If you can't find the answer you're looking for here, please visit the Debt Management Help Centre, which has even more information.

What is a Debt Management Plan?

This is a flexible and informal repayment agreement for people who are struggling to meet their monthly repayments to unsecured lenders.

It does not cover secured debts such as mortgages, or homeowner loans, which are secured against your property. You'll still have to make these payments as usual, or your home may be at risk.

Some of the things we can do for you while you're on a debt management plan include negotiating lower repayments with your lenders and providing help, support and advice as you repay your unsecured debts.

Your lenders do not have to accept these lower repayments. But we will talk to them on your behalf and work behind the scenes to keep your payments affordable and on track with regular reviews. We calculate the total cost and duration of your debt management plan and we deal with contact and correspondence from your lenders.

You make one monthly or weekly payment and we distribute the correct amounts to your lenders, minus our administration fee.

Please note that making lower payments would mean it takes longer to pay off your debts and it could cost you more in the long run. Plus, since you're not sticking to your original repayment agreements, this will affect your credit rating.

For more information, please read what is a debt management plan?.

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How does a debt management plan work?

We create a budget for you, to ensure your payments into the debt management plan are affordable. We also help you to deal with 'priority' debts, which could include utility arrears or CCJ (County Court Judgment) debts.

We explain your financial situation to all of your lenders and try to negotiate lower monthly repayments. We ask them to freeze interest and charges too. They are under no obligation to accept these changes, but we have been negotiating with lenders since 1993, and we have an excellent success rate.

If you have more than one lender, we work out how much you can afford to spend on each debt, based on how much you owe each of them - we call them 'pro-rata payments'.

You make one monthly payment to us, and we distribute the correct amount to each of your lenders, minus our service charge for managing the process.

If your lenders have accepted a lower monthly repayment, remember that paying back your debts may take longer and could end up costing you more - and that your credit rating will be affected.

For more information, please read how debt management works.

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Do I qualify for debt management?

If you're struggling to repay one or more unsecured debt, like credit cards, personal loans, store credit, overdrafts, catalogue debts or utility arrears, you could qualify for debt management.

You'll need a reasonable amount of disposable income. Your disposable income is the money you have left over after paying for all the things you need. This is the money you can afford to spend on debt. Lenders will want to see a reasonable monthly repayment.

The amount of debt you’re in is less important than your ability to repay it - based on your income. We have helped people who are unemployed, on benefits, pensioners, and professionals too.

You can fill in our form at the top of the page to see if debt management could be the best way for you to clear your unsecured debts.

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How do I apply for a debt management plan?

Request a call back from one of our personal advisors. They will go through your financial situation with you, completely in confidence.

After looking at the options open to you, if you qualify for debt management and decide to go ahead, we'll take over all lender contact and negotiations to arrange your plan.

We'll need some documents which you can send us in pre-paid envelopes that we provide. You have final approval of your plan before it goes ahead - and you can still cancel within a fourteen day cooling off period after joining us.

You can begin your application on this page.

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Will my lenders accept the debt management proposal?

Lenders are not obliged to accept your repayment proposal, but we will do all we can to make it work. We have been negotiating with lenders since 1993, helping people to start and complete debt management plans. We would only recommend a debt management plan if we thought it could help you. If your plan wasn't accepted, we could continue to negotiate with your lenders - or we may be able to suggest a more suitable approach.

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Will you deal with my lenders?

We will deal with your unsecured lenders for you, so you don't have to. You can forward any correspondence onto us in the pre-paid envelopes that we provide. If a lender does call you, you can explain that you are on a debt management plan with Gregory Pennington and ask them to speak to us instead. Read more here.

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Will I have to borrow more?

No. Debt management makes your existing unsecured debts more affordable by negotiating a reduction in your monthly payments and, unlike a debt consolidation loan, doesn't require you to borrow more.

Bear in mind that because debt management means that you're paying less for longer, you may end up paying more in interest (unless your interest and charges are frozen).

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What’s included in my Debt Management Plan?

You are assisted by a Personal Finance Team, who can be contacted about anything to do with your Debt Management Plan. This is a small dedicated team that are experienced in giving advice and guidance tailored to you and your needs.

Our creditor liaison team takes over all contact with your lenders. This can be useful when negotiating the initial repayment terms, and during your plan - in the event of any issues.

Every customer is given exclusive access to Gregory Pennington Online, our online debt management portal which lets you view your debt management account privately and securely, over the internet.

As part of Think Money Group, we can provide access to a range of other financial products designed to help you make the most of your money while you're on debt management. We can also help you check whether you're on the best deal for your utility bills and whether you're entitled to any benefits.

If you are struggling with legal issues caused by debts inside or outside of your plan, we have a specialist team who could help you to resolve these issues- just ask a member of your Personal Finance Team about the help we could provide.

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What debts can be included in a debt management plan?

You can include most unsecured debts on a debt management plan, including credit cards, loans from a bank or building society, payday loans, overdrafts, store credit, catalogue debts and utility arrears.

You cannot include debts with HMRC, student loans, or debts secured against your home, but you should be left with enough of your income to repay these 'priority' debts while you're on a debt management plan.

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What documents do I need for debt management?

We'll need the account numbers from your original credit agreements, so that we can contact the correct people about your debts and negotiate your new repayment terms.

If you have unopened post from your lenders, please open it to see where you stand and for an up-to-date balance. This information will help us to negotiate with your lenders.

Your lenders will want to see proof of your income before starting debt management.

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How long does debt management last?

Lowering your repayments does leave you in debt for longer, but a debt management plan wouldn't last more than a reasonable amount of time. The repayment period really depends on how much debt you have - and how much you can realistically afford to repay every month.

The more you can set aside for your debts, the more quickly you can repay them - but you should only repay them at a rate you can afford.

As you're paying less each month for longer, it may cost you more to repay your debt - especially if your interest or charges aren't frozen.

If a debt management plan is no longer suitable for you, we might offer you another debt solution instead, such as insolvency.

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What are the costs involved with a debt management plan?

A fee is taken directly from your monthly payment. It is 18.5% of each monthly payment, subject to a minimum of £38.50 and a maximum of £90. This fee covers the costs of the following:

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How are my debt management payments calculated?

We work out pro-rata payments, because they are fairer on all lenders when you have more than one debt.

If you had two debts and one of them was 50% bigger than the other one, then 50% more of each repayment would go towards that one.

We can work out pro-rata payments for multiple debts of different sizes. Read more here.

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What happens if I have second thoughts?

If you decide debt management isn't right for you after you've started, simply tell us.

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Can debt management help to freeze my interest and charges?

We always ask lenders to freeze interest and charges on your debts, but they are not legally obliged to do so. Some lenders may reduce the interest and others may freeze it altogether. We do have excellent relationships with lenders, and will do what we can to negotiate a better deal for you.

We have been negotiating with lenders since 1993 and we know how to put a good case across on behalf of our clients. However, the decision to freeze interest or charges is ultimately theirs. If they don't agree to it at first, we will always try to negotiate at least a reduction in the interest instead.

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How can debt management help me?

It may be that a little financial planning is all that's needed to get your finances in order and we'll happily advise you on how to work out a budget. However, if your situation is more serious or you feel unsure about dealing with your unsecured debts alone, a debt management plan gives you real hands-on help.

The best way to assess whether a debt management plan is right for you is to talk to a professional debt adviser. They can also explain the alternative solutions – such as bankruptcy or an IVA – and, after going over your circumstances with you, recommend the one that's best for you.

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Can debt management help if I am retired?

We can help retired people with debt management plans.

If you are retired, or are approaching retirement, you could still qualify for our help. However, if you are approaching retirement, it could affect your ability to repay your lenders - if your income drops - although we have helped people in this situation before. Speak to one of our personal advisers to find out if we could help.

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What is a Personal Finance Team?

Your Personal Finance Team is a small team of experts you speak to within Gregory Pennington about your Debt Management Programme. If you need to speak to someone here about anything to do with your debt, they are the people to speak to- which you can do on the phone, or by sending an email via Gregory Pennington Online.

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Will debt management affect my credit rating?

Lowering your repayments will lower your credit rating for up to six years from the date you lowered your repayments. This can make it difficult to obtain credit again for that time.

However, many people are already having problems with their credit rating before applying for debt management - because of arrears, or other issues. Repaying debt - even at a slower rate - is better for your credit rating than letting the situation get worse.

Debt management can help people to regain control of their finances and repay their debts, in full, at a more realistic and affordable rate.

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Who will know about my debt management plan?

Only us and your lenders will know about your debt management plan. You can choose whoever you want to tell, or not. Your debt management plan is completely confidential.

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