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DIY Debt Management

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A debt management plan (DMP) is essentially an informal agreement with your creditors for a lower monthly payment. There are two ways of arranging a DMP, either through using a professional debt management service or by negotiating with the creditors yourself.

Like many DIY jobs some people are more confident, have more time and are happy doing the job themselves. Whereas others believe that certain jobs should be only done by professionals. Here, we will guide you through the process of resolving your debt problem yourself and provide you with the letter templates.

If you need help at any point use our forum or alternatively if wish Debtwatchdog to do the donkey work then either give us a call or just submit your SOA for one of our debt experts to review, remember this is free.

If you are banking with one of your creditors it is important to change your bank account. If you don't then your creditor will just dip into your bank account and take any funds which they are owed.

DIY Debt Management -Step 1

Draw up a Statement of Affairs (SOA). This is breakdown of your financial position and lists all of your assets, liabilities, income and expenditures. For your convenience we have provided an SOA calculator which will guide you through drawing up an SOA. Do not try and exaggerate the amount you spend on food, petrol, utilities etc as this may harm your application with your creditors.

DIY Debt Management - Step 2

Obtain an accurate balance. Once you have completed your SOA the next thing you are going to do is write to all of your creditors, stating that you are experiencing financial problems due to ... and would like to obtain an accurate statement of your balance. Spend some time considering what you will put in your letter with regard to the reasons behind your debt problem. Creditors will be less sympathetic if the reason is partying or bought too many Christmas presents. However, if your financial problems are as a result of an illness or losing a job then creditors will be more likely to agree your request for lower monthly payments.
Download Creditor Information Request Letter

DIY Debt Management - Step 3

Revise your SOA. Once you have received all the letters back form your creditors update your SOA accordingly with the correct figures. With the revised SOA you will be able to see how much available/disposable income you have to offer amongst your creditors.

DIY Debt Management - Step 4

Offer letter. Write back to all of your creditors with a pro rata offer from your available income. If you have no available income you can write to them using this letter template.
Download Pro-rata offer letter
Download No Available Income Letter

DIY Debt Management - Step 5

Set up a direct debit to all of your creditors with the offer amount. You must ensure that your creditors receive the cleared funds on time. If you don't this may jeopardise your agreement.

DIY Debt Management Problems

  1. You may have missed out one creditor. If after writing to all your creditors you find that you missed one out then you'll have to repeat steps 1-5 again to include payments to the new creditor.

  2. The creditors have rejected your SOA. If you have exaggerated your SOA or your spending on groceries is out of line with your creditors' expectations then they will reject your SOA. You must then revise your SOA with lower figures or provide proof of your expenditure. You can get help on our forum with this.

  3. Some creditors have refused to freeze interest and charges. Write back to the creditor asking them to reconsider their decision and stating that if interest and charges are not frozen then you'll struggle to clear the debt and may end up going bankrupt.

  4. Some creditors want more money from you. If your SOA is an accurate and reasonable reflection of your spending then you should write back to your creditors re-stating that they are receiving a pro rata amount of the available income and that you cannot been seen to be favouring any one particular creditor. Your creditors will know that a county court judgement will only enforce a payment from what you can afford and if your SOA is correct then this will be a waste of time and money for the creditors.


A debt management plan is not the final hurdle in getting you financial life back in order -it is the first step. Thrift and budgets are the keywords for the rest of your life. You will find it difficult to get credit because your credit score will be severely affected consequently you will need to change your priorities in life. Treat this as a positive and look at ways to economise and live within your budget. The only things you should be spending on are the essentials; food, clothes and a roof over your head, oh and one other thing, time. Invest time in thinking and planning; food shopping, costing your next major purchase and just getting things into perspective.

DIY Debt Management Related

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