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moneytalks
Starting Member

2 Posts

Posted - 17 Jan 2011 :  17:25:50  Show Profile  Reply with Quote
My new partner has debts and is about to enter a debt management plan. She's been told it must be based on joint household income and expenditure and the money that's left goes to the debt plan.

I don't have any debts though. Do I not get a say of how much should go to the DMP and how much comes to me?

Debt Management Advisor
Debt Management Expert



366 Posts

Posted - 17 Jan 2011 :  18:32:09  Show Profile  Reply with Quote
Hello moneytalks and welcome to the DMP forum.

This is a notoriously difficult subject to explain clearly. I'll do my best, but don't hesitate to ask more questions if you need more clarification.

The usual way of working out a debt management plan contribution is to start off by taking a record of all of the household income and expenditure. This is helpful because it helps to work out how much of the household expenses should be "absorbed" by each partner based upon the proportion of the household income that they earn. For example if two people earned the same, it would be fair to assume that each should pay half of the mortgage/rent.

The household disposable income (the money left over after all reasonable costs are taken into account) should then be divided between both parties. For example, if there is ?400 left over in total and you both earn the same it would be fair to say that ?200 of it belongs to each of you.

At this point the partner with debts would usually use their share to fund a debt management plan, and the other partner can spend their share as they wish.

You should therefore find a DMP company that will work on this basis. You may decide to use some of your share of the disposable income to help clear the debt total sooner, but that should be a decision for you rather than a debt management plan company.

There is also a guide to this subject on this site which provides more information which you might find to be useful:
http://www.debtmanagementplanforum.co.uk/debtmanagementexpenditureguidelines.php

I am a CertDR qualified Debt Advisor. I advise on all of the available UK debt solutions. For advice on all of your options please click here:
   
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James Falla
Debt Management Expert



277 Posts

Posted - 17 Jan 2011 :  19:15:44  Show Profile  Reply with Quote
Hi Moneytalks

I think Debt Management Advisor has explained it very well. If your partner is considering a debt management plan, when she calculates her disposable income, she just need to make sure she is contributing a fair share to the household expenses. You do not have to put any of your disposable income towards the debt if you do not want to it is up to you.

Interestingly I was discussing this very thing last week with someone who is considering an IVA. Where an IVA is concerned, generally the creditors will want the full household disposable income to be used as they will argue that unless you have got together with your partner very recently you have also benefited from the debt and so shoud contribute to repaying it. I do not believe that this arguement has filtered through to debt management plans yet though.

Personal Debt Expert
BeatMyDebt.com
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moneytalks
Starting Member

2 Posts

Posted - 19 Jan 2011 :  11:00:41  Show Profile  Reply with Quote
Hi both. Thanks for your help. I think I get it. Basically, I get some of the left-over money and not all of it has to go to the DMP. I'll let me partner know. Cheers.
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Debt Management Advisor
Debt Management Expert



366 Posts

Posted - 19 Jan 2011 :  12:08:18  Show Profile  Reply with Quote
That's generally acknowledged as being the fair way to go about it moneytalks.

Please let us know how you get on.

I am a CertDR qualified Debt Advisor. I advise on all of the available UK debt solutions. For advice on all of your options please click here:
   
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James Falla
Debt Management Expert



277 Posts

Posted - 20 Jan 2011 :  17:50:35  Show Profile  Reply with Quote
Ultimately moneytalks, you are not liable to contribute towards your partners debt if she chooses to do a debt mangement plan. However, if you want to help her out, one option is to save your share of the disposable income so that you could fund lump sum full and final payment offers which would clear her debts much faster.

Personal Debt Expert
BeatMyDebt.com
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