Debt Management Plans

Debt Management Plans (DMP)

What is a debt management plan?

A Debt Management Plans are a method used in the UK for paying personal unsecured debts.

Why consider a debt management plan?

If your debts are getting difficult to pay
Your payments are always late
The debts are taking up too large a portion of income
Debt are exceeding income it.

Who administers debt management plans?

A debt management plan can be administered by the person in debt or can involve a 3rd party debt management firm that looks at all or some of the debts.

How do debt management plans work?

 The debtors income and budget are assessed and a disposable income is discovered.
 Interest rates are negotiated with the lenders.
 Payments with the lenders then sent.

Facts to consider for debtors considering debt management plans

1. Please note that for consumers considering Debt Management Plans; whilst initial advice is free, fees may be payable to the debt management plan provider. Please beware of any commercial service that states or implies that the service is free and fails to explain that while there may be no charge for the initial advice, charges may be incurred at a later date.

2. Please note that for consumers considering Debt Management Plans (DMP), although the consumer may become debt free at the end of the DMP period, if a default notice has been issued the effect is likely to remain on the consumer's credit profile for a lengthy time.

3. Please note that for consumers considering Debt Management Plans (DMP), if interest and charges continue to apply then there will be an increase in the total amount of debt to be repaid and that due to lower monthly payments it is very likely that the debt will have to be repaid over a longer period of time.

4. Please note that for consumers considering Debt Management Plans (DMP), although a debt management plan may be able to negotiate a lower monthly payment, this will usually lead to an increase in the size of the sum to be repaid and that a consumer's credit rating may be impaired.

5. Please note that for consumers considering Debt Management Plans (DMP), although debt management plan providers may be able to negotiate a lower monthly payment this will usually lead to an increase in the size of the sum to be repaid and that a consumer's credit rating will be impaired.

6. Please note that for consumers considering Debt Management Plans (DMP), because a DMP is not legally binding the creditors are not obliged to freeze interest and/or charges.

7. Please note that for consumers considering Debt Management Plans (DMP), creditors are not obliged to accept the debt repayment plan and unless they do so, interest and other charges will continue to be added.

8. Please note that for consumers considering any debt repayment solution all procedures are not a simple low-risk processes and also that there is never a guaranteed outcome favourable to the consumer in negotiations with creditors. This particularly applies to a Debt Management Plan and also a Individual Voluntary Arrangement (IVA) or Protected Trust Deed (PTD) until the procedure has been approved at the creditors meetings.

9. Please note that for consumers considering Debt Management Plans (DMP), do not be misled into thinking that a DMP will improve the consumer's credit rating because the debtor is likely to have an adverse marker on their credit profile for longer due to an increase in the repayment period and, as the agreement is not legally binding the plan can be cancelled at any point meaning that the debtor could fall further into arrears.

10. Please note that for consumers considering an Individual Voluntary Arrangement (IVA) or Protected Trust Deed (PTD) or Debt Management Plan (DMP); the likely impact on a consumer's credit rating on entering into an IVA/PTD/DMP or on the consumer's ability to obtain credit in the short and medium to long term.

11. Please note that for consumers considering an Individual Voluntary Arrangement (IVA) or Protected Trust Deed (PTD) or Debt Management Plans (DMP); do not be misled into thinking an IVA/PTD/DMP is stress free, when in fact any debt remedy solution should be given serious thought beforehand.

12. Please note that for consumers considering Debt Management Plans (DMP), the possibility of potential negative outcomes such as the effect on their credit rating, potential for bankruptcy and likelihood that interest and/or charges will continue to accrue therefore increasing the debt.

13. Please note that for consumers considering Debt Management Plans (DMP); a DMP is not legally binding creditors therefore may continue to request further payments or take enforcement action against them. A debt management company can not guarantee that there will be no further contact from the creditor.

 

Whatever solution we recommend, honest, best advice is always on offer. If you are in debt call us without obligation today on 0800 074 6918. If you are calling from a mobile just let us know and we will call you straight back.

 

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