Sole Trader Debt Management

Sole Trader Debt | Debt Management

What is a Debt Management Plan?

A Debt Management Plan is an Informal Agreement between you and your creditors where you pay back your debts at a monthly rate that is affordable for you. If you are a Sole Trader and you are struggling to keep up with Debt repayments, entering into a Debt Management Plan could help your business.

A Debt Management Plan is flexible and your debt repayments are gathered into one flexible monthly payment and paid out to your creditors on a pro rata basis.

Due to the informality of a Debt Management Plan you or your creditors can opt out of it at any time. You can arrange it as a temporary debt solution until you get back on your feet financially and your business is no longer at threat, or you can aim to have it as a more long term debt solution.

How do I arrange a Debt Management Plan as a Sole Trader?

You can arrange a debt management plan yourself or with an appropriate Debt Management Company who will be responsible for all correspondence and payments between you and your creditors.

As an Insolvency company we do not offer Debt Management Plans. We only offer formal Insolvency solutions. If an insolvency solution is not your recommended course of action, with your permission, we will refer you to an appropriate agency/provider that can assist you further.

Benefits of a Debt Management Plan

• An Informal agreement that can be stopped at any time as your circumstances change (for better or worse).
• Interest & Charges could be frozen if creditors agree.
• Creditor pressure eased as they deal with us.
• 1 easy monthly payment to cover all unsecured debts.
• A debt management company will negotiate with creditors on your behalf, so offers are more likely to be accepted and interest frozen than if you try to do this yourself.
• A debt management company will help you prepare your plan, including agreeing the level of your household and personal spending based on guidelines, which can then be used to put your case to the creditors.

Disadvantages of a Debt Management Plan

• Can remain on credit file for sometime after completion if a default notice has been issued.
• If your creditors refuse to freeze or reduce interest this can lead to increased debt level as repayments are less than original contractual payments. Any further collection actions may incur costs that will normally be added to the debt.
• Debts will be repaid over a longer period of time than if contractual payments were made.
• You will repay debts until they are paid in full
• Repaying debt over a longer period may increase the total amount to be repaid.
• Your ability to obtain credit will be affected in the short term and might be affected in the medium to long term.

Sole Trader Debt Solutions

IVA An IVA is a legal agreement between you and your creditors where you pay back a portion of the debts that you owe. In an IVA you can be debt free in 5 years or less. Read more	Debt Management A Debt Management Plan is an Informal Agreement between you and your creditors where you pay back your debts at an affordable monthly rate. Read more
Personal Bankruptcy Bankruptcy should only be considered as a last resort. Bankruptcy is a way of dealing with your debts if you are unable to pay them. Read more	Debt Consolidation Debt Consolidation is a method used by many people to consolidate their debts into one lower affordable payment. Read more

For more on Debt Management…Call our Business Debt Advice line on: 0800 0436 999