What happens if I want to cancel a debt management plan?

28 May2021

If you have spoken to a debt adviser and they recommended a debt management plan, and you're happy to go ahead, you can still cancel it if you change your mind. If you cancel it during the first 14 days after accepting our terms of business, you would receive a refund of any fees you have paid.

A debt management plan is not legally binding, so you can cancel it at any time you like. However, if you want to cancel your debt management plan after the first 14 days, you would still be expected to pay the fees associated with the service you received. You wouldn't be charged a fee to cancel your plan.

Consequences of cancelling a debt management plan

Many people choose a professional debt management plan because they want someone with expertise to deal with their lenders for them. If you are thinking about cancelling your debt management plan, it's worth considering whether you want to deal with your lenders yourself.

If you owe money to a lot of different companies, a debt management plan can help to keep them all ticking over without having to deal with them directly. Cancelling would mean you would be responsible for contacting your lenders again to negotiate your repayments. It's likely they would begin contacting you again too.

Of course, if you're cancelling your debt management plan and entering into another debt solution, this probably won't be an issue.

Payment holidays on a debt management plan

If you're considering cancelling a debt management plan because you can't keep up with your payments, have you considered asking to temporarily lower your repayments? People's circumstances change, and a temporary set-back or drop in income can make it more difficult to afford repayments.

Your lenders might accept lower payments temporarily until you get back on your feet, so it's worth asking instead of cancelling the plan altogether - although you may still have to pay any fees for the service you receive. Slowing down your repayment will delay the day you clear your unsecured debts and your lenders are under no obligation to agree to lower repayments or stalling repayments. Having said all that, it probably still worth doing if it can help you manage while things are tough.

If it's looking like you cannot afford your repayments for the foreseeable future, or your lenders won't accept a payment holiday, you would need to find another way to deal with your debts. A debt management company can discuss your alternative options with you.

It's sometimes possible to cancel a debt management plan and enter into another debt solution. Or it may be possible to leave a debt management plan and come back to another one later on if your circumstances change.

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Tags: debt, debt management plan, creditors, lenders, debt management, unsecured debts

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