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Am I too old to start a Debt Management Plan

There are no age restrictions for starting a Debt Management Plan (DMP). You cannot be too old to use this solution as long as you are able to sustain a reasonable monthly payment towards your debts. Having said that one of the key issues is the time that it will take you to become debt free. If you use a DMP your debt repayment period will be significantly extended. It is therefore very important to consider if this type of debt solution will allow you to become debt free within sensible a time scale. This is particularly the case if you are nearing retirement or are already retired.

Are you ever too old to use a Debt Management Plan?

There is nothing in the law which says that over a certain age you are too old to start a Debt Management Plan. However when making your decision you must take two things into account. The first is how much you are able to afford to pay into the Plan each month. The payment you will make is based on your surplus income. If you are currently receiving a pension and your income is relatively low you must be comfortable that you can realistically sustain the payment. If you are currently nearing retirement age you should take into account the possibility that your income may fall when you retire and the affect that will have on your Plan.

Secondly you need to consider how long it will take you to become debt free using a debt management plan. Remember that being in the Plan could significantly extend the time it will take you to repay your debts. You may be comfortable with this situation because the pension you expect to receive is enough to maintain your repayments. However if your income is likely to drop meaning you will then struggle it may be sensible to consider alternative solutions.

DM4U Tip: If you just need a short term solution to manage your debts a DMP might be a great option for you. For example if you are nearing retirement age you may be planning to take a lump sum from your pension and use this to pay off your debt. Starting a DMP can give you a breathing space from your creditors until that time.

If you feel you are too old for a Debt Management Plan what is the alternative?

If using a Debt Management Plan means that you will still be struggling to pay your debts after you have retired you may feel that you are too old for this option. You should then consider alternative debt solutions which may be better suited to your situation.

One option is an Individual Voluntary Arrangement (IVA). This solution restricts the time over which you have to make payments towards your debts to 5 years. After this any unpaid debt is written off. If you are a home owner you will have to agree to try and re-mortgage and release equity if you can. However if you are nearing retirement age it is unlikely that you will be able to do this and your IVA payments will instead be extended an extra 12 months.

If you are not a home owner and you feel you are too old to start a DMP you should also consider bankruptcy. A significant advantage of this solution is that you do not have to make any further payments towards your debts if you have no surplus income. If you can afford to make payments these will last for a maximum of three years.

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