DMP (Debt Management Plan)

What is a Debt Management Plan? Debt management refers to a repayment plan designed especially for you, which will enable you to get your debts down quickly and easily by allowing you to make one affordable payment every month. How a does a Debt Management Plan work? Once we have worked out your Income and Expenditure, if you have an available monthly surplus to pay your debts, we will then write to your creditors to arrange a monthly payment you can afford. You normally pay your DMP by making one monthly payment, which is then distributed to all your creditors. Click here to see our fees.

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What are the advantages of a DMP?

• An advantage of a DMP is that you can combine all your unsecured debts into a single monthly payment. We believe that this will give you better control over your finances as you will know where your money is going each month. Depending upon the outcome of negotiations with your creditors, they may agree to freeze interest rates and charges on what you owe.
• Debt Management Plans are not legally binding and therefore you can stop paying into the agreement at any time if you decide to handle your finances without help.
• No need to involve property – if you are a home owner, there is no requirement for you to release equity from your property as part of a Debt Management Plan. However, you may wish to do so to make a lump sum settlement offer to your creditors.
• Private agreement – a debt management agreement is not a formal insolvency procedure. As such, it is not advertised publicly and your name is not included on the formal insolvency register.
• Reduce payments to an affordable amount – a debt problem will reduce the amount you have to pay to each creditor to fit the budget you can afford. This means that you will no longer have to borrow from one creditor to pay another and you get back in control of your financial situation.
• Peace of mind – in many cases, you will no longer be contacted by your creditors or debt collectors.
• You may be able to vary your payments if your circumstances change.
• Stop unwanted letters and telephone calls. You can refer letters and phone calls to us and we will deal with all of your creditors, collection agencies and solicitors.
• You only make one affordable payment each month.
• By reaching agreement with your creditors a DMP may suspend actions against you such as County Court Judgments (CCJ’s) .
• You do not have to do any work in relation to your debts, for example, drafting letters to creditors.

What are the disadvantages of a DMP?

• 100% of debt must be paid - although your monthly payments reduce, you still have to repay everything. This could take a very long time.
• No legal protection – a Debt Management Plan is not a legally binding agreement so creditors could in theory proceed with court action.
• Credit rating affected – using a DMP will mean that you default on your payment agreements with your creditors. They will issue default notices against you which will be registered on your credit file. This will make it difficult for you to borrow more money in the future.
• Repaying the debt over a longer period may increase the total amount to be repaid.
• Your ability to obtain credit will be affected in the short term and might be affected in the medium term.
• If you enter into a Debt Management Plan it is very important to meet debts such as mortgage, rent and utility bills as a priority and consumers are advised not to ignore correspondence or other contact from creditors or those acting on behalf of creditors.