Debt Management Plan(DMP)

Information about the most popular debt solutions

What is a Debt Management Plan?

Debt Management PlanA debt management plan (DMP) is an agreement with the people you owe money to (a creditor). It helps you repay your debts in full with a reduced monthly payment over an extended period of time.

DMPs are provided by debt management companies and charitable organisations, They negotiate with your creditors to lower your monthly repayments and freeze/lower interest and charges. Commercial companies usually charge a fee for this service, but you can seek independent help and advice from a charitable organisation.

A DMP is an informal alternative debt solution to a Debt Relief Order (DRO) or IVA which are formal insolvency solutions for people in debt.

Who Can Use a Debt Management Plan?

The plan is dependent on the income you have once you have paid of necessary bills (disposable income). It is less dependent on the number or size of debts you have.

a DMP is used when you:

  • You have some disposable income to allow you to make lower monthly payments
  • You only have enough money at the end of each month to pay a restricted amount to your creditors.
  • You may have a short term liquidity problem. This is where you have payments due but you can’t afford to pay them now. In which case you may be able to pay them at a point in the future.

You can enter into an arrangement with a debt management company. When you do so you will make one payment to that company and they will share the money out between your creditors (people you owe money to).

What Debts Can be Included in a DMP?

  • Bank Loans
  • Credit Card
  • Student Loans
  • Local councils – rent, rates
  • DWP debt management – where there have been overpayments to social security benefits.

There some payments which cannot be included in a DMP. These are priority debt, the consequence of not paying them being far more serious.

  • Mortgages
  • Council Tax & Child Support
  • Court Fines
  • TV Licences
  • Utilities such as gas, electric and water
  • Personal tax and VAT

What Information do I Need to Provide?

You will need to be open with the debt management plan dwp provider. You must be prepared to provide bank statements, evidence of income, all of your debts. Also a full statement of incomings and outgoings. This is the only way the company will be able to work out with you, how much you can afford to give your creditors.

What Happens Next?

A plan will be drawn up by the company who will provide you with a monthly figure to pay to them. You will be asked to sign a agreement which must adhere to. If you have problems paying the monthly figures then you must tell them quickly. There is more online on the government website. For Debt managment plans help speak with us!

Call Us Now To Get Help With Your Debt – Call Us Before Speaking To Anyone Else 0161 850 0467

Advantages of a Debt Management Plan

Informal arrangement that avoids the need for formal insolvency procedures

Creditors may suspend actions against you

Creditors may freeze interest payments

One monthly debt repayment

Disadvantages of a Debt Management Plan

Due to this being an informal arrangement, creditors can change their approaches at any time

Credit rating will still be affected
Reducing your monthly repayments will extend the length of repayment and may mean you pay more in total over a longer period
Your credit rating may by harmed during a DMP. Your DMP will be noted on your credit file and will be affected for a further 6 years after your last DMP payment.

Other Debt Solutions

Individual Voluntary Arrangement (IVA)

Debt Relief Order (DRO)

Bankruptcy

Why Choose M1 Bailiff Solutions?

Our aim

To help you understand the options available to you and help you on your road to debt recovery.

Experienced team

We have many years experience helping our customers improve their circumstances and deal with their debts.

Experts on

Bailiff enforcement action; Council Tax arrears; court fines; parking fines; gas, electric and water arrears; debt consolidation; and all debt solutions.

Call us on 0161 850 0467 or request a call back