Debt Management Plan (DMP)

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Introduction

Are you struggling to pay credit cards, loans, store cards or catalogues? Would you like someone to help sort out your payments and talk to creditors for you? Would you like to be able to pay one affordable amount to all your creditors each month?

If this sounds like you, a Debt Management Plan may be just the thing.

This factsheet outlines the following:

1. What is a Debt Management Plan?
2. Who can use the service?
3. How does it work?
4. Is it the best option for me?
5. What do I do next?
6. Your credit reference file

What is a Debt Management Plan?

• A Debt Management Plan is an affordable repayment programme set up by Money Advice Direct and managed by an independent company.
• We help you work out what you can afford to pay each month.
• You pay this amount to the debt management company.
• The debt management company pays your money to all your creditors for you.

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Who can use the service?

Anyone who can answer Yes to these 3 questions:

• Do you have debts of £5,000 or more?
• Do you have 3 or more individual creditors?
• Do you have £100 or more disposable income per month?

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How does it work?

First you need to put together a personal budget sheet to see whether you have enough disposable income. You can use our pack Dealing with your Debts which includes a budget sheet and a guide to how to complete it.

If you don’t have the pack, you can do your own budget. Add up all your household income. Then add up all your essential expenses, like rent, mortgage, household bills, food, travel, child care.

Take the second figure from the first.

What you have left over is your disposable income.

If your disposable income is £100 or more, a Debt Management Plan might be a good option for you.

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Is it the best option for me?

A Debt Management Plan is a good option for people who can afford to make regular payments to their creditors and want an easy, hassle free way to pay.

At Money Advice Direct we look at all your options with you so that you can make the best choice.

We can give you more information about Debt Management Plans as well as advising you on bankruptcy, individual voluntary arrangements (IVA) and self-help options for dealing with your debts.

If you would like more information on anything about your debts, Phone us for advice.

Our advice to get debt free (subject to terms and conditions) is non-judgemental & completely confidential.

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What do I do next?

If you are interested in a Debt Management Plan please call us now on our freephone number 0800 074 6918.

We will send you our Debt Management Plan pack.

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Your credit reference file

If you miss payments on a credit debt, this will be recorded on your credit reference file by your creditor whether or not you then set up a DMP. This will usually make it harder for you to get credit. Some creditors may also ask for a note to be put on your credit reference file to say you are on a DMP. Phone us for advice if you require further information on how to obtain a copy of your credit reference file.

Remember: You can always Phone us for advice about any difficulty you are having in dealing with your debts

0800 074 6918

© Copyright National Debtline 1994 (updated January 2004)