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What is a Debt Management Plan?
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Debt Management Plan (DMP) Debt Management is an arrangement that a third party company will implement between you and your creditors. A Debt Management Plan is an informal way to negotiate with your creditors and agree an affordable monthly payment you can afford until your debt is repaid. When the Debt Management Company negotiates with your creditors they will endeavour to have the interest and charges being applied on your accounts frozen and stopped, however this is not a guaranteed and one Debt Management Company may be better than another.
Pros of a Debt Management Plan -DMP
You pay one monthly payment to your chosen Debt Management
Company who distribute all of your payment on a pro-rata basis to your creditors
Interest and charges are often frozen, so the debt doesn't increase.
You will no longer need to negotiate with your creditors alone.
The Debt Management Company will make all creditor contact on your behalf.
Cons of a Debt Management Plan – DMP
It isn't legally binding agreement unlike an IVA, so creditors
can proceed with court action (although your chosen Debt Management Company will assist you if this should happen)
If you are only making a small monthly payment and have a high level of debt, it could take several
years to clear your debt. (your chosen debt management company will recommend all alternative solutions if this is the case) Do I pay any upfront fees on my Debt Management plan?
Each Debt Management Company has different administration fees Complete our FREE 60 second debt calculator to compare Debt Management Companies and this will give you a breakdown of available Debt Management Companies, administration fees and Ratings..
How Do I pay for my Debt Management Plan – DMP?
Most Debt Management Companies will take payment over the Telephone, Cheques, Bankers Drafts and Giro Slips. The Best way to make your monthly Debt Management Payment is by Standing Order this is simple and stress free.
Is my home at risk whilst I am on a Debt Management Plan?
No, a debt management plan -DMP is an alternative to bankruptcy and isn't legally binding so you
won't lose your home if you continue to make the agreed payments into your DMP. It is always the priority
of your debt management company to ensure that your property is not at risk and allowances will be made
within your income and expenditure to keep up the payments on any mortgages or loans secured on
your property.
Can I still use my credit cards whilst on a Debt Management Plan?
NO, you will not be able to use your existing credit cards or store cards whilst you are on a
debt management plan. Your creditors will not freeze interest and charges on your debt management plan if you use your cards.
Can I stop my Debt Management Plan if my situation Improves?
YES, you can cancel your agreement at anytime. Your chosen Debt Management Company may ask for that in writing so they can inform your creditors that they are not managing you debts anymore. REMEMBER, don’t cancel your Debt Management Plan if you are struggling with your monthly payments, speak to your Debt Management Company and they may be able to reduce your payment.
Will I get Default Notices whilst on a Debt Management Plan – DMP?
By entering into a Debt Management Plan your creditors can issue a default notice as you are defaulting on your original credit agreement. If you receive a default it doesn't automatically mean the creditor is going to take legal action. The default will appear on your credit file for 6 years from the date it was issued. A default notice will stop you taking on any further credit, which to be honest may not be a bad thing.
Can I have a Debt Management Plan if I live in Scotland?
Yes unlike an IVA a debt management plan is available in scotland. The more popular debt solution in Scotland is a Trust Deed (Protected Trust Deed), which will normall write off up 90% of your debt.
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