Self-Managed Arrangements

If your debts are becoming unmanageable then it’s possible to assess your own income and expenditure, work out what you can pay to your creditors each month, and then approach them to negotiate what is often a reduced regular payment until all your debts are fully repaid. This is known as a self-managed arrangement.

Self-managed arrangements – things to consider

Approaching a self-managed arrangement requires a significant amount of planning and organisation.

First, you should make a full and honest income & expenditure analysis to assess how much money you left over each month. If this list contains any luxury items, then you should seriously think about finding cheaper alternatives or cutting them out altogether if you really want to demonstrate to your creditors that you want to address your debts.

Armed with figures to show why you can’t afford to make your full debt repayment, you should then approach each of your creditors by letter to explain that you wish to repay your debts, but you’re unable to do so at the agreed rate.

It’s even worth requesting that creditors freeze interest and other charges to help you repay your debts.

Your creditors are actually under no obligation to accept your new repayment terms, but if they can see your list of income and your outgoings, then they may well accept that you are doing your best to repay and therefore accept your new terms.

What is the downside to a self-managed arrangement?

You should never, of course, miss any payment to your creditors. If you have a number of creditors then you need a very good administration system to ensure that you make every payment on time.

It’s very important to ensure that you stick to your budget and not overspend, because then you’ll have even less to pay your creditors.

Remember that you are now likely to be making a reduced payment (that you suggested) so if you miss payment, a creditor may feel that you’re not serious about repaying your debt and insist on the full payment as per the terms of the original credit agreement.

If you’re not able to do this then a creditor may take legal action to attempt to recover the debt.

Thinking about a self-managed arrangement?

A self-managed arrangement could work for you if you can accurately assess your own income and expenditure, cut out any luxury expenses, negotiate a lower repayment with your creditors, and then keep to these repayments until your debts are cleared.

Not right for you? Read about other debt solutions that may suit you better: Trust Deed, Sequestration, Debt Arrangement Scheme (DAS), Low Income, Low Assets (LILA), Buy-To-Let Mortgage, Bridging Loan, Remortgage, Debt Management Plan, Full & Final Settlement, Equity Release, Debt Consolidation Loan.