Clearing your debts together as a couple is important for a stress-free life, free of financial burdens.
A joint debt management plan is for couples that wish to end their debt troubles together.
Read this article for more information about joint debt management plans and how they work.
Without further ado, let’s get started.
What Is A Debt Management Plan?
A debt management plan (DMP) is a repayment plan that provides debt solutions for people with lots of debt from several creditors.
How Does it Work?
With a DMP, your finances are managed by a professional. You are provided beneficial debt advice and your insolvency practitioner talks to your lenders directly to work out different debt solutions.
Your DMP practitioner decides upon a particular amount of money that you have to pay him every month. This amount is determined considering your financial circumstances and your creditors’ wishes as well.
This mutually agreed upon amount of monthly installments is collected by your practitioner who then pays them to respective collectors. This is a big plus especially when you have an overwhelming number of creditors reaching out to you to collect debt.
Remember though, you cannot pay priority debts with a debt management plan and must clear them before entering the DMP.
A money advice service appoints a debt advisor and practitioner to find appropriate solutions to your debt problems. Your debt management plan company should connect you to a professional authorised and regulated by the Financial Conduct Authority.
Moreover, the company should provide you data protection as well. Ask for their data protection registration number to make sure that your information isn’t leaked at all. The company number can be found on their website or you can call their phone number to ask for it.
Keep in mind that your DMP provider must be authorised and regulated by the Financial Conduct Authority otherwise they cannot provide DMP services to you.
Make the right choices while looking for a debt solution because good debt advice goes a long way in ending your debt problems.
I would recommend Financial Ombudsman Service UK for debt solutions and debt management plans. They have a responsive and elaborate complaints procedure as well if someone has a complaint against their employees. Most importantly, all their analysts are qualified.
What Is A Joint Debt Management Plan?
A joint debt management plan is a plan through which couples can pay back their debts. These are usually for joint debts or for credit cards under joint names.
You can also get joint debt management plans for people living in the same home or sharing the same bank account. Remember that these are only for joint debts with your partner.
The living costs are calculated from the whole household income and not just the income of a single person or partner. What’s more is that the payment and the surplus income is also calculated for both the partners on a joint basis.
This is inconvenient if the couples involved in the joint DMPs are going through a separation or a divorce. The separation is definitely going to have an impact on the debt solution as both parties will have separate finances now.
And it’s not a matter of who gets to pay what. Each partner must contribute to the joint plan to ensure the payment of their debt on time. A person going through a divorce cannot opt out of the joint plan and must see it through.
They must follow their debt solution to the end to pay off their creditors.
How Does A Joint Debt Management Plan Work?
In a joint debt management plan, the surplus income is worked out on a home basis instead of on an individual basis. This makes it easier to split the repayments of the debt and makes the payment process much faster too.
Joint debt management plans are available to all couples (even those that are now going through a separation or a divorce). If they entered the plan while they were together, they must see it through to the end.
Even if you aren’t both homeowners but share the same house, you can still opt for a joint DMP. The income is collected on a home basis and the whole household income is accounted for while calculating the monthly repayments.
In a joint DMP, it doesn’t really matter how much debt a person has individually. When you’re in a joint debt management plan, you must contribute the same amount to eliminate the debts of both partners. This is why it can be a problem for divorced couples to deal with joint DMPs.
Frequently Asked Questions (FAQs)
Will A Debt Management Plan Affect My Relationship With My Partner?
No, a debt management plan isn’t likely to affect any couples’ relationship. However, it varies from person to person. A joint debt management plan is basically paying off your debts to your lenders and managing your finances together.
Can I keep my car on a debt management plan?
Yes, you can keep your assets while clearing your debts. Unless your creditors decide to make you bankrupt, you can keep your car until your debts are cleared. You should have nothing to worry about as long as you’re paying the minimum monthly payments.
Does a debt management plan affect your credit?
Yes, a DMP is a good solution to end your debts but it does show on your credit rating. It goes off of your credit history after 6 years.
Can I add more debt to a debt management plan?
Yes, you can consolidate more debt in a debt management plan. However, usually you aren’t allowed to take more debt on a DMP. You must first clear your existing debts.
Also, only non-priority debts are to be included in a DMP.
Is a Debt management plan better than an IVA?
Yes, in an IVA, you have to pay all of your disposable income to your plan. In a DMP, however, your DMP provider can negotiate a monthly rate for you and give you advice on what to do as a solution to your debt problems.
DMPs are complicated to understand, and when it comes to two people, it is even harder to work out the specifics.
This is why it is important to reach out to a professional so that you have accurate information on what to do.
If you need more support, do reach out to us on the given email address. We’ll make sure to get back to you as soon as possible.