A DMP (Debt Management Plan) is an informal agreement between a debtor and their creditors. DMP’s could help to reduce outstanding debts over a fixed period of time at a lower repayment level to help people regain control of their finances. To calculate how much they can afford to repay – the income and expenditure of the individual or household is taken into consideration including rent/mortgage, secured loans, utility bills, and essential living expenses (food & TV license etc.) and the surplus is the individual’s disposable income which is then distributed to creditors (less any fees due) If the individual’s circumstances change, payments may be lowered or raised accordingly – so the plan is totally flexible and there is no binding contract.
So if you’re experiencing financial difficulties and finding it hard to make your monthly repayments on any loans, credit cards, store cards or other unsecured debts then a Debt Management Plan could help you regain control of your finances.
It sounds similar to an IVA, but there are a few important things to remember;
- A DMP is not legally binding.
- Your credit rating will be affected.
- Your creditors can still contact you.
- Your debt is not written off (it can get worse).
- Interest could continue to build up.
- A DMP can take a long time to complete.
Would you like to know if you qualify for a Debt Management Plan? – Apply Here