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If you have disposable income available each month after paying all of your essential expenses like travel, food costs, bills and mortgage payments, but just not enough in order to pay back your creditors then you are likely a good candidate for a DMP. A DMP can be devised around the amount of disposable income you have left over and negotiated with your creditors so that you can then make smaller more affordable monthly payments.
If however, you are experiencing difficulty in paying your essential expenses every month and are completely unable to pay back any of your creditors then a DMP is certainly not the best solution for you. In this case we would be happy to advise you on the most advantageous solution for your individual situation – contact us on 0800 230 0379.
|Monthly Payment Before DMP:||£395|
|New Monthly Payment With DMP:||£120|
1 house repossessed every hour within the UK
222 People are declared insolvent or bankrupt every day!
£28,556, the average amount owed by a UK adult!
A Debt Management Plan (DMP) is an agreement formulated with your creditors, by a debt manager, to repay your debt in monthly instalments. DMPs are designed to help you better afford to repay your debt, by organising your monthly repayments into one single monthly payment, which is more affordable and freezing your interest payments.
Your plan will take into account your monthly expenses, to make sure that your essential needs like travel, food, household bills, and mortgage payments are taken care of adequately. Any money you have remaining after these expenses can then be used to pay back your creditors. The manager of your DMP will be negotiating with creditors on your behalf, to help you attain a plan that best fits your financial situation, and so that you do not have to contact your creditors yourself.
A DMP can therefore often result in more affordable monthly payments, which are made to the manager of your DMP, who then divides it between your creditors accordingly. Keep in mind though, that although your payments are more affordable, this can mean that you pay back your debt over a longer period of time, and therefore paying an increased amount overall.
If you would like help in creating a DMP, please feel free to contact us on 0800 230 0379 to discuss the best solution for you.
Find out if you qualify
Debt Management Plans can be helpful, flexible debt solutions, but they're not for everyone. Have a look through the various pros and cons to help work out if a DMP is right for you. If you're still not sure, get in touch and speak to one of our experts for free.
It’s important to look at your current financial situation to work out exactly how much money you have left over each month after paying for all of your monthly essentials, and to see if this likely going to be enough to cover your new single monthly payment.
You can work out your budget by following these steps:
Generally speaking, in order to qualify for a DMP you will need to have a minimum of £2000 in unsecured debts.
You do not have to be in employment for you to be eligible for a Debt Management Plan, unlike with many other debt solutions available. As long as you have the necessary income each month to meet your single monthly payment, then you can qualify for a DMP.
DMP’s are available in England, Scotland, Wales and Northern Ireland.
Debt Management Plans are designed to only deal with unsecured
debts (also known as non-priority debts) like credit card debts,
unsecured loans, overdrafts etc. Secured debts, which cannot be
included within a
debt management plan, include rent and mortgage payments,
electricity bills, magistrate’s fines, and council tax. If you have
secured debts then these will have to be dealt with using a
separate debt solution.
You can still qualify for a DMP if you have a CCJ against you, and you can use your DMP in order to repay any debts which are associated with that CCJ. Be sure to make your debt manager aware of any CCJ’s which you have against you.Will I be credit checked before I am accepted for a DMP?
Since you are not being lent any money, a credit check will not be required.
A DMP is designed to better enable you to repay your debt and therefore should benefit both you and your creditors. The increased likelihood of you being able to repay your debt should be an attractive prospect.
Your creditor’s acceptance of your decision to implement an arrangement is not necessary. You have a legal right and are entitled to use the services of a debt management company. Some lenders prefer not to deal with debt managers as this hinders their ability to apply pressure on you, and therefore will make threats in order to dissuade you. Lenders cannot refuse to take payment on your behalf from a debt manager and then attempt to take you to court for failing to make payment.
Your creditors are not obligated to accept an offer of repayment which is below the contractual minimum, but often creditors will accept such an offer once they see that it gives you a better chance of being able to meet your monthly repayments and therefore improves their chances of receiving repayment.
It cannot be guaranteed that your creditors will stop interest charges on the money you owe them. Often though, creditors will acknowledge your willingness to repay your debt through a DMP and will freeze the interest on your debt.
It cannot be guaranteed that your creditors will not contact you at all during the plan. Your debt manager however will take over the communications with your creditors and negotiate on your behalf. If your creditors send you letters asking for payment, you can forward these to your debt manager to be handled. If you receive phone calls from your creditors, politely explain that you are now using the services of a debt manager who is the person they should contact in the future.
As a DMP is not a legally binding agreement, your creditors can still continue to issue CCJs against you. However your creditors are unlikely to do this, as the amount you are required to pay as detailed by the CCJ is likely to be the same or similar to the amount you already paying as part of your DMP. Default notices can be issued and will go down on your credit history for a period of six years.
The cost of setting up a DMP is equal to the cost of your first two monthly payments. Set up include provision of a financial wealth check, assessment of your financial situation, gathering information from creditors, and handling of the communications between you and your creditors. After set up, 17.62% of each monthly payment (a minimum of £30) is attributed towards the costs of running the DMP.
The amount which you repay to your creditors each month is dependent on your individual financial situation, your essential expenses, your income, and the negotiations with your creditors. Your debt manager will endeavour to formulate a monthly payment plan that is most affordable for you.
Because a DMP is an informal agreement, you can alter your payment structure at any time to suit your financial situation. As long as you are able to meet the minimum payment (usually £80) then your DMP will continue even as your income changes. If you attain additional income, you are not legally obligated to increase your monthly repayments.
These arrangements are not legally binding, and therefore you can cancel at any time without discourse. You will not be charged a cancellation fee, and any funds which have not been paid out to your creditors will be returned to you, however, 28 days notice is required.
We will assign you a debt manager who will discuss with you your financial situation, your essential expenses, your income and your amount of debt. Your debt manager will explain the process to you and make sure that you understand all of the implications of a DMP.
Your debt manager will contact your lenders and discuss the prospect of lower repayments. Using the information provided about your income and overall financial capabilities, your debt manager will negotiate for a monthly repayment amount which is most affordable for you.
You begin making one single monthly payment to your debt manager, who will then distribute the necessary payments to all of your creditors. During this period you will not need to contact your creditors, you contact your debt manager who will speak to your creditors on your behalf.
Plans generally take between 4 and 8 weeks to arrange. The time for set up varies depending on the amount of debt, the number of creditors you have, and how long negotiations with them go on for.
This will depend on numerous factors, like the amount of debt you owe and the amount of disposable income you have available to make repayments each month, the amount your repayments have been reduced to, and whether or not your creditors have agreed to freeze the interest on your debt. For example, if your total unsecured debt was £10,000 and your disposable income allowed you to make payments of £200 per month, then your DMP would last for 50 months (roughly 4 years). Remember that you can cancel your DMP and move to a separate debt solution if necessary at any time.