Can I get a debt management plan if I am self-employed?

If you can no longer afford your agreed monthly payments towards your unsecured debts, you'll need to arrange payments you can realistically afford to make.

You may be able to agree a debt management plan with your unsecured lenders, allowing you to repay your debts at a pace you could afford.

But could you get a debt management plan if you're self-employed? Let's find out.

What is a debt management plan?

A debt management plan is a new repayment plan that could be agreed with your unsecured lenders. Basically, you'd ask your lenders to accept lower monthly repayments - based on what you can safely afford once you've taken care of all your other essential monthly costs (rent/mortgage, food, bills, etc.)

If your lenders agree to a debt management plan, they may also agree to freeze interest and charges on your debts, so they won't continue to grow as you're repaying them. (But bear in mind that making smaller payments over a longer time could end up being more expensive overall if interest isn't frozen.)

If all goes well, you'll make your repayments on a debt management plan until you've repaid everything you owe, or until you can make your original repayments once again.

Making lower monthly repayments will affect your credit rating for six years - which is likely to make getting further credit difficult during this time.

Could I enter a debt management plan if I'm self-employed?

A debt management plan could only be suitable if you can afford to make regular monthly repayments - which means you must have a reasonably stable income in order to enter one.

If you're self-employed, and you can prove to your lenders that you have a regular income from your business, you should still be able to agree a debt management plan. Again, it's a case of showing that you can commit to repaying your lenders the new agreed amounts on a regular basis.

Just bear in mind that as a debt management plan will affect your credit rating, if you rely on extra credit from time to time, you may struggle to borrow further while this remains on your credit rating - and may be charged a higher rate for any credit you do borrow.

However, if you can no longer afford your original repayments, there's every chance your credit rating will have already been affected - in which case, a debt management plan could still be the best approach for you.

If you're self-employed and you're unsure whether debt management is suitable, a debt adviser could give you an answer.

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• Debt Management Plan - FAQs
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• Can I get an IVA...
• Debt consolidation calculator

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