Will A Debt Management Payment Plan Affect My Credit?
Whether it will impact your credit or not entirely depends on the way your plan is structured. For example, if you are still paying the full contractual amounts to your creditors, your plan is not likely to appear on your report. If you are paying less than the minimum payment, as agreed with your creditors, ‘partial payments’ will be recorded on your credit file. These will remain on your report for six years, even if the debt has not been fully repaid.
There are several types of information that a creditor could record on your credit file, which could include:
- Payment history – the payments you have made up to the point of your plan will have been logged on your credit file. As your plan payments could be less than your original payments, your credit history could show partial payments being made towards the debt, even if the reduced payments are agreed with your creditor.
- Financial plan flag or marker – each account included in your plan could have a marker added to it that shows repayments are being made through a management plan. A creditor can only add a plan marker if they accept your offer of payment.
- Defaults – if your creditor defaults your account, this will be added to your credit report. You may not receive a default for every debt on a plan, but it is common for accounts to default.
If this type of plan is something that you think could work for you, take the time to compare debt management plans to find the best option. You should be able to ask questions with no pressure to apply, and find an agency that offers transparency. If you are not sure that a plan is right for you, there are other options you could try, such as unsecured debt consolidation loans, an IVA, bankruptcy, or seeking further help from the Money Advice Service.
How Do I Find The Best Debt Management Plan For Me?
When searching for the best debt management plan, you should make sure that you look for providers that:
- Are licensed by the FCA
- Discuss all the possible options available to you to handle your issues in the best way
- Tell you clearly at the beginning of the process how much it will cost
- Help you to understand what will happen if they stop running the plan if you miss repayments
You should also compare debt management plans to make sure you find a provider that offers a good deal. You can use comparison tools to find an agency that offers good results, an affordable service, and a friendly approach to put you at ease.
If you need any further help with finding a debt management plan online in the UK, please seek impartial help from charities such as StepChange or Money Advice Service.