The amount of debt needed to start Debt Management
There is no limit to the amount of debt which can be included in a Debt Management Plan (DMP). Whether you owe less than £1000 or more than £100,000 you can use this type of solution to solve your debt problem. Having said that a DMP can be better suited to lower amounts of debt. This is because you still have to repay everything you owe during the Plan. If the debt is large repaying everything could take a very long time. Nevertheless if you owe a lot of money the solution could still be suitable for you if you just need a short term breathing space from your payments.
Is there a minimum amount of debt required for a Debt Management Plan?
Although there are no rules governing the amount of debt you need to include in a Debt Management Plan generally speaking the solution is more suited to lower amounts of debt. It is common for people to use this solution if they owe between £1000 and £15,000
One of the main reasons for this is that you are still obliged to repay all of the debt included in your Plan. Your creditors do not automatically agree to write off any debt for you when you use this solution. As such if you owe less than £15,000 it should still not take an unreasonable length of time to repay your debt depending on how much you can afford to pay each month.
DM4U tip: It is important to understand that a DMP may not be suitable for you if you owe less than £15,000. If the amount you can afford to repay each month is very low it may still take many years for you to repay your debt using the Plan. In this situation it might be better for you to consider an alternative debt solution.
Is there a maximum amount of debt which can be included in a Debt Management Plan?
There is no maximum amount of debt that can be included in a Debt Management Plan. It could still be the right solution even if you owe several hundred thousand pounds. If the amount you can afford to repay each month means that you can complete the Plan in a reasonable period of time then it may be suitable for you. If you cannot afford to repay what you owe in a reasonable time frame you might still use a Plan if all you need is a short term solution. This may be while you wait for your financial circumstances to improve.
Having said that unless there are other mitigating circumstances you would not normally chose to start a DMP if by doing so it will take you more than 5 years to pay back your debts. Where you are facing more than 5 years of debt repayments there may be another debt solution which might be more suitable for you.
DM4U Tip: If you are considering using a Debt Management Plan you should not just consider the amount of debt you owe. You also need to think about your surplus income (the amount you can afford to repay each month). This will dictate how long the Plan is likely to last and so will be a key factor in your decision making.
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