It is possible to use a Debt Management Plan if you are self employed. However some of your debts might have to left out and paid seperately.
In this article:
- How to get a debt management plan if self employed
- Can you include business debts?
- Will you have to change your bank account?
Want to start a DMP? Give us a call (0800 077 6180) or complete the form below to speak to one of our experts
How to get a debt management plan if you are Self Employed
If you are self employed you can use a debt management plan to help manage your debts. You can continue to run your business while the solution is in place.
That said, setting up the agreement is more complicated then if you were employed. This is particularly the case when calculating how much you can afford to pay your creditors each month. You will normally need to work out your personal income using average business revenue and cost figures.
Although you are allowed to set up a debt management plan yourself as a self employed person it will normally be best to get help. A specialist company and help you with your calculations and work out a sensible sustainable monthly payment.
Want help with setting up a debt management plan? If you are self employed we can help. Call 0800 077 6180 or complete the form below.
Can you include business debts in the Plan?
You may have used a credit card or overdraft to support your business. Technically these are business debts. However they can be included in a your debt management plan because they are in your name. It is actually advisable to include them to get maximum benefit from the plan.
Where you owe money to suppliers they can also be included. However they may refuse to continue to supply you with goods or services. If you need to continue to trade with a key supplier it may be possible to leave them out of the plan and continue paying them.
Money you owe to HMRC can’t be included in the Plan. This includes personal tax arrears and things like VAT if you are registered. You will need to negotiate a separate repayment agreement direct with HMRC to manage this type of debt.
If you owe a significant amount to HMRC a debt management plan might not be the best option for you. You may be better off considering an IVA where tax debt can be included.
Will you have to change your business bank account?
Starting a debt management plan does not automatically mean you will have to change your bank account. You only have to do this if you owe a significant amount to the bank and are going to include them. If you do then opening a new account with a different bank is likely to be a good idea.
As a self employed person you might have a business bank account with the bank you owe money to. If so you should be able to open a similar account elsewhere. However if this proves difficult opening a new personal account and using that for your business is normally acceptable.
Once you start your Plan your credit rating will become poor. This will mean you will find it difficult to open a new current account. In these circumstances you will normally need to use a basic bank account.
It will be difficult to get credit after starting debt management. If you need credit you may be able to leave one facility such as a credit card out of the plan and continue to use this.
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