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Joint debt management plan

Joint debt management plan

Joint debt management plan

A joint debt management plan can be set up if you and your partner are both struggling to pay the debts you owe. You don’t have to have any joint debts and will only have to make a single monthly payment.

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Want to start a joint debt management plan? Give us a call (0800 077 6180) or complete the form below. The advice is free and confidential

Is a joint debt management plan possible?

If you and your partner are both struggling with debts, you are allowed to include all of these in a joint debt management plan (DMP). This combines both of your debts within a single Plan.

A key advantage of the joint Plan is you only have to make a single single payment into it each month. This is then shared between all the debts making them much easier for you to manage.

You may both have different levels of debt and a different number of creditors. This doesn’t matter. You can start a joint plan even if one of you has just one debt and all the others are in the other person’s name.

It is not necessary to have any joint debts. The plan can be set up where all your accounts are in your separate names or where some are separate and others joint.

A joint debt management plan will normally be used by couples living in the same household. Generally speaking, it is not suitable for two people who live apart.

How are the monthly payments calculated?

The monthly payment for a joint debt management plan is usually based on a household surplus income. This is calculated in the following way.

First, total up your household income. This is all the money you both have coming in from all sources. Then work out your total household living expenses budget. Deduct the total expenditure amount from the total income to give the household surplus. This is the amount you pay into the Plan each month.

It doesn’t matter if you keep your finances separate and don’t have a joint bank account. The calculation is the same.

You don’t both need an income to start the Plan. If only one of you has an income, the agreement can still be set up. In effect they will be paying for both your debts.

The minimum payment for a joint debt management plan is normally £100/month. As long as at least this amount is available after the household expenses are accounted for, the Plan can be implemented.

Can you leave debts out of a joint debt management plan?

As with any DMP, you are allowed to leave a debt out of a joint debt management plan if you wish. You just need to make sure you have sufficient surplus income to continue making the payments towards this debt as well as the minimum required for your Plan.

This practice is not recommended. By keeping one creditor out and continuing to pay them, it is likely that you will significantly reduce the amount you can pay into the Plan. This can make it much more difficult to negotiate with the remaining creditors who may be less likely to freeze their interest.

That said, sometimes you have to leave debt out of the plan. Perhaps you owe money to a creditor who won’t agree to a DMP such as HMRC. It can also be difficult to include a CCJ.

Guarantor loans normally have to be left out of a DMP because the creditor would then start chasing the guarantor. But if the guarantor is is part of the joint debt management plan, the guarantor loan can be included.

What if you split up during a joint DMP?

It is not normally a problem if you and your partner split up while you are both in a joint DMP.

The joint agreement can be easily cancelled by simply stopping your payments. You can then both set up individual Plans based on your personal income and expenses budgets.

Of course you both have to include any joint debts in your individual Plans. You both have joint responsibility to pay these.

The only time you might face a problem after splitting up, is if one of you doesn’t have sufficient income to support your own debt management plan. In these circumstances, someone else (perhaps a family member or friend) is allowed to maintain your payments for you.

Where this is not possible, you should contact us for more advice about your options. Solutions such as going bankrupt which don’t require you to make any monthly payments towards your debts, might be a more suitable option.

Need help with a joint debt management plan? Call us (0800 077 6180) or complete the form below. The advice is free and confidential.

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