There is also a naming point worth knowing. The Financial Conduct Authority’s glossary definition of a debt management plan requires a third party which administers the plan and distributes the money to the lenders.

So strictly, what you set up yourself is a direct arrangement with each creditor rather than a debt management plan. What a debt management plan is sets out the defined term.

Yes. The activities that need authorisation are carried on by way of business, and dealing with your own debts is not one of them.

The two regulated activities

Article 39E of the Regulated Activities Order makes giving advice to a borrower about the liquidation of a debt a specified activity, and article 39D does the same for negotiating with a lender on a borrower’s behalf.

Both are about doing it for somebody else as a business. Neither reaches you writing to your own credit card company.

There are also exclusions, and their scope is not for a web page

Chapter 7B of the Regulated Activities Order contains exclusions at articles 39H to 39L, covering people connected to the agreement, certain energy suppliers, land agreements and members of the legal profession.

Whether any of them applies to a particular firm you are dealing with is not something to settle from a guide. Ask the firm which permission or exclusion it is relying on.

Anyone charging you for it does need authorisation

A firm running an arrangement as a business needs the debt counselling and debt adjusting permissions, whether or not it charges. How to check a firm is authorised sets out the search.

Six steps, and the budget is the piece everything else rests on. None of it is complicated and all of it takes time.

The six steps

The budget is the same document a provider or a money adviser would build. Which budget information you need sets out what goes in it.

Include everything

A creditor offered a share while another is left out will say so. Which debts can go in an arrangement covers what belongs where.

Write to everyone at once

Offers sent a few at a time invite comparisons you cannot answer. Sending the same budget to everyone on the same day is the simplest way to keep the arithmetic honest.

Give each creditor a reasonable period to reply before you chase. A first payment sent with the offer shows the figure is real.

Keep a copy of everything you send

Every offer, every budget, every reply. Without a provider, your file is the only record that the arrangement exists at all.

Divide your surplus by the total you owe, then apply that fraction to each balance. Everyone gets the same share of what you have.

The arithmetic, illustrated

That example uses £200 a month against £10,000 of debt. It illustrates the method and is not a figure anyone should expect.

Send the budget with the offer

A creditor is deciding whether the figure is genuine, so the budget is what does the persuading. How a monthly payment is worked out covers the same calculation on a provider-run plan.

Ask for the interest freeze in the same letter

No creditor has to freeze interest because you are on a debt management plan. No statute requires it and no Financial Conduct Authority rule requires it.

National Debtline’s Scottish guide says the case has to be made to each creditor separately, and whether an arrangement freezes interest sets out what the rules require.

Set a review date when you send the offer

Tell each creditor you will write again in twelve months with an updated budget. It makes the offer look like a plan rather than a one-off letter.

And expect some to say no

No creditor has to accept a debt management plan, and nothing requires one to give a reason for refusing.

A refusal does not stop the arrangement working for the rest, and whether creditors have to accept covers what to do about it.

The ones with consequences beyond a lower credit score. Council tax, rent, fuel and any debt already in enforcement come before the credit cards.

Council tax is the Scottish one to watch

A council can obtain a summary warrant and instruct sheriff officers without the court steps a credit card issuer has to take. What happens if you do not pay council tax sets out the sequence.

Whether council tax arrears belong in an arrangement at all is its own question, and including council tax arrears answers it.

The regulator’s rules do not reach those creditors

Those rules bind only firms the Financial Conduct Authority regulates. They do not reach your council for council tax, HMRC, or the Child Maintenance Service.

So the forbearance argument that works on a lender does not work on a council, and our council tax debt advice page covers what does.

Where a debt is already being enforced

An arrangement does not touch it, and what a time to pay order is covers the route that does.

The work, and somebody to complain about. You do not give up any protection, because there was never any to give up.

The trade, set out

The compensation cover applies to money an authorised firm holds for you, and the Financial Services Compensation Scheme does not cover debt advice itself.

The limit is £85,000 per eligible person per firm, for failures on or after 1 April 2019. Where nobody is holding your money it does not arise at all.

You keep the rights that matter against your creditors

CONC 7.3.4, which is a rule, requires a lender to treat customers in or approaching arrears with forbearance and due consideration, whether or not a firm is acting for you.

The conduct rules on contact and collection in CONC 7.9, which contains rules and guidance, apply in the same way, and a complaint about a lender can still go to the Financial Ombudsman Service.

What you lose is the complaint route about the arrangement

With no firm involved there is nobody to complain about if the arrangement goes wrong. That is a real difference, and for many people it is a price worth paying.

No, and this is the part to be clear about. A self-managed arrangement has exactly the same legal effect as a provider-run one, which is none.

Nothing in Scots law attaches to it

A plan does not stop enforcement. It has no statutory effect on diligence at all.

A creditor can raise an action, obtain decree, serve a charge for payment and instruct diligence while you are paying. Whether an arrangement stops a wage arrestment sets out what does stop one.

Paying keeps the debt alive

A payment is an acknowledgement, and acknowledgement interrupts the five-year prescription in Scots law. That matters if a debt is genuinely old.

Take advice before paying anything towards a debt you have not heard about for years. A well-meant first payment can restart a clock that had almost run.

Nothing about it is recorded anywhere

There is no register of arrangements, whoever runs them. That privacy is the other side of having no protection at all.

And nobody is monitoring it but you

A provider has to review the plan at least annually under the rules. Running it yourself, that job is yours, and when to move to a statutory solution sets out the signals to watch for.

When the arithmetic does not work, or when something is already being enforced. Neither problem is solved by doing the paperwork yourself.

Free providers cost you nothing either

StepChange and Christians Against Poverty set plans up and run them free of charge.

National Debtline and Citizens Advice Scotland give free advice on whether a plan is the right answer, without administering one for you.

So the saving from doing it yourself is not money. Whether plans are free or charge fees sets out where the funding comes from.

The statutory routes do things no arrangement can

Under the Debt Arrangement Scheme the freeze is automatic and statutory from the day you apply. On a debt management plan there is no freeze at all unless the creditor agrees to one.

StepChange says many creditors do stop interest. None of them has to.

And you cannot apply for those alone

A debt payment programme under the Debt Arrangement Scheme has to be applied for by an approved money adviser, and the adviser cannot charge you for the work.

National Debtline’s Scottish guide says a programme is usually a much better option than a free debt management plan for someone living in Scotland.

Getting a second opinion costs nothing

Citizens Advice Scotland, StepChange, National Debtline, Advice Direct Scotland and council money advice teams will check your figures free. Doing that first does not commit you to anything.