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By Ben10
My wife and I have a debt management plan but I am being made redundant shortly. Will it be possible to re-negotiate my monthly payment and reduce it by approximately half which we will be able to fund from my wife's income ?
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By Hayden
Hi there Ben and welcome.

Given your change of circumstances, it is definitly possible to reduce the payments you are making into your debt management plan. By definition, a debt management plan is informal and one of the advantages is that you can change your payments if you need to. Its likely that some of your creditors will not like the reduced payments, but unfortunately there is nothing you can do if you are being made redundant.

Do you think you will receive a lump sum in the form of a redundancy payment? If so, it is possible that you might be able to settle some or all of your debts with lump sum payments.
Hello Ben

The point that Hayden has made here is a good one. If you are already in a debt management plan and receive a redundancy pay out, there is every possibility that you may be able to settle some or all of your debt by offering a lump sum payment to your creditors. However, you must be careful that you leave some money for you to live on while you find another job.

If you are not going to receive a lump sum, there should be no problem with you reducing your monthly debt management payments. However, just be mindful of how this will effect the time to repay the debt. If you are reducing your payments by half, this is going to at least double the time it will take to repay your debt. If you are renting (or have a home with little equity) you might be better off considering an alternative solution such as bankruptcy.
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By Hayden
I have spoken to a few people recently who seem to be having success settling debts which they have been paying through a debt management plan. It seems as though its easier to do these deals if the debt is with a collector or has actually been bought by a debt purchaser such as 1st Credit or Link Financial. I would definitely go for that option if you can.
Last edited by Hayden on Mon Oct 05, 2009 4:59 pm, edited 1 time in total.
Hello Ben10,

My advice would be to set aside any redundancy payment you receive to cover living expenses. The employment situation is tough right now and that's where your focus should be....finding appropriate employment as soon as possible.

Your debt management plan can be adjusted during this period. Many of our clients suffer temporary losses of income and by proactively explaining this to their creditors we find that they get a lot of support while they re-establish their income.

If there is a redundancy payment and you get back into work quickly (with some of the money left over) you may wish to consider some settlement offers.

If it takes a long-time to get into employment or you feel you need to accept a job paying less than you have been used to I agree that consideration should be given to other debt solutions as well.

Good luck.