Shared debt management plan

What can you do if you`re struggling with shared unsecured debts? These days, many of us in long-term relationships have debts in both partners` names, and these debts can lead to the same kind of problems as debts under just one name.

If you and your partner find yourselves unable to meet your unsecured debt repayments, you may be eligible for a shared (or `joint`) debt management plan. This works in much the same way as any debt management plan, except that your finances will be considered together.

Quick intro to debt management

A debt management plan involves reducing your unsecured debt repayments to a level you can afford and repaying those debts over a longer period of time. This helps you ensure that you can afford your unsecured debt repayments alongside all your other essential costs, but it can also mean you pay interest for longer, and you could pay more as a result.

Having said that, lenders will often agree to freeze interest and other charges while your debt management plan is ongoing - although, as with the debt management plan itself, they are in no way obliged to agree to this.

A debt management plan can last as long as necessary - either until your circumstances get better (and you can go back to making your original payments), or until you have paid off all your unsecured debts.

When is a joint debt management plan needed?

If your finances are linked and you have shared unsecured debts that you can`t afford, you may need to enter into a debt management plan together.

This will work in the same way as a regular debt management plan, but you will both be equally responsible for making payments.

Things to consider

Debt management is only suitable for unmanageable unsecured debts. If you can afford your debt repayments as they stand, your lenders simply won`t accept lower payments, so you`ll have to demonstrate your problem to your lenders. You must also be confident that you can still afford to repay your debts in full with your new repayments.

Also consider the disadvantages: missing the repayments you originally agreed will affect your credit rating, and because you`ll be paying as much as possible towards your debts at all times, you will be left with little money for anything else until the arrangement comes to an end.

Thinking about entering into a debt management plan? Take our free debt test to find out whether it`s the right solution for you.