Debt Management Plan
A Debt Management Plan (DMP) is a flexible and informal debt solution which might be suitable if you are struggling to manage your debts (above £1,000) and monthly repayments. Payments in a DMP start from £80 per month depending on your affordability. We do not charge any upfront fees for setting up a Plan.
A Debt Management Plan allows for a new and affordable payment plan to be negotiated with your creditors. where you can repay your debts at a lower rate that is more affordable to you. It is considered to be one of the more flexible solutions, which can allow for ammendments to be made more easily. The plan can also be terminated at any time should your circumstances change.
Starting a Debt Management PLan with us
One of our advisors will have an in-depth chat with you to determine what debt solutions are available. You will be asked to provide details about your income, outgoings, your total debts and any other necessary information required in order to provide you with the correct advice for your circumstances. You will then be given the choice to decide how you wish to deal with your debt.
If it is established that you wish to proceed to with a Debt Management Plan with us, we will write to your creditors to advise them of the change to your financial situation and your inability to fulfill your contractual debt repayments. We will provide them with details of your current circumstances and your proposed offer of repayment. We will also request that they freeze any interest and charges on your accounts (this is not guaranteed) and that they will correspond directly with us for the duration of your plan.
Creditors will advise us if they are willing to accept your proposed offer. Payments to creditors will commence as soon as we receive your first monthly payment. The payment will be distributed to creditors on a pro-rata basis, after the deduction of our agreed monthly management fee.
If you are interested in finding out more about Debt Management then please phone us now on 0800 043 0200 and one of our advisors can chat with you further.
Pros of Debt Management
- A flexible agreement that can be ammended should your circumstances change.
- Interest & Charges could be frozen if creditors agree.
- Creditor pressure eased as you can direct all creditor correspondence to us.
- 1 affordable monthly payment to creditors in the plan.
- We will prepare and administer your plan, including negotiating payments to creditors.
- We will negotiate with creditors on your behalf, so offers are more likely to be accepted than if you try to do this yourself.
Cons of Debt Management
- Your credit rating may be impacted due to making reduced payments towards your debts.
- The duration of your plan will depend on your level of debt. All debts must be repaid in full.
- Repaying debt over a longer period may increase the total amount to be repaid.
- A DMP does not offer legal protection from creditors. They may still take action against you.
- We cannot guarantee that interest and charges will be frozen in your plan, which may result in a longer plan.
Debt Management Q & A
Below are a few of the frequently asked questions we are asked in relation to our DMPs. If you have any questions please feel free to get in touch and we will find the answers you need.
A Debt Management Plan is designed to deal with all unsecured creditors. If a creditor is unsupportive of the plan, adjustments can be made to allow for this creditor to be paid separately. You will always be advised to maintain ongoing payments to secured creditors, such as your mortgage provider.
Debts that may be included in a DMP are (this list is not exhaustive)
- Credit Cards
- Utility Arrears
- Council Tax Arrears and current year
- Store Cards
- Payday loans
- Debts to family and friends
- Debts for professional services, i.e. solicitors, accountants, vets etc
- Some debts owing to HMRC for tax and national insurance arrears or tax credits overpayments
There is no set duration for a Debt Management Plan, because the plan will be unique to your circumstances, your total debt level and the amount of your payment each month. The proposed duration of your plan will be discussed with you before your plan begins.
You do not have to be employed to enter into a DMP, however, you must have money available every month to pay into your plan.
It doesn't matter what your residential status is when considering a Debt Management Plan. You can be a homeowner or a renter. A DMP will always be tailored to your individual circumstances.
All correspondence between us is strictly private and confidential. We will never disclose any information about your plan to anyone other than the creditors involved. Should you wish to be discreet in dealing with correspondence from us, we can facilitate this to suit your needs i.e. corresponding via email etc...
If it is possible for you to continue banking with your current provider, then there would be no reason for you to have to change. If you have any outstanding debts with the same provider as your bank account, we would advise that you open a new bank account with a provider that you do not owe money to. The reason for this is that in some circumstances, a bank will freeze your banking facilities when notified of your DMP.
A Debt Management Plan is an informal solution and therefore does not provide legal protection from creditors. A creditor may still take action against you. Should you receive any notification of legal action from a creditor whilst in a plan, contact us immediately.
A CCJ does not impact your ability to propose a Debt Management Plan. You should disclose all information about your debts including any CCJ's you have against you, to ensure that you are given the correct advice for your situation.
Should there be a change in your circumstances which may impact your ability to make your monthly payment, you should contact us immediately, so that we can assess your situation and make adjustments where necessary.
It is advisable that in the event you are unable to make a monthly payment at any time, that you contact our office immediately, so that we can inform your creditors of your inability to pay that months payment. If you continually miss payments to your plan, without notifying or discussing the situation with us, then it is likely that your plan will be terminated. Communication with us at all times throughout your plan is of the utmost importance. We are here to help.
If at any time, you feel that the Debt Management Plan is no longer suitable for you, the plan can be terminated at your request and your creditors notified accordingly. You will still be responsible for any outstanding debts owing to your creditors.
When you enter into a DMP, creditors will be asked to correspond with us directly in regards to your debts. This does not guarantee that you will not receive correspondence from them. However, you should forward this correspondence to us, so we can deal with it for you.
A Debt Management Plan does not appear on your credit file. As you are making reduced payments to your creditors, you may still be issued with default notices which will appear on your credit file. Your credit rating will be affected in the short term and possibly in the medium to long term.