Debt Management Plan

A Debt Management Plan (DMP) is where you or a third party negotiates more affordable monthly payments with your creditors. Unlike other debt solutions, this method is not legally binding.

Your new proposed installments are based on what you can afford. This is done through an income and expenditure exercise and your payment term is normally over a longer period of time.

This solution involves you paying back your debt in full and your creditors have the option to agree to freeze your interest and fees on the debts included, although this is not guaranteed.

A private debt management company will charge a fee for administering a DMP but there are debt charities who offer the service for free.

Advantages of a DMP

  • Your DMP is not recorded on the insolvency register
  • Your creditors may be more likely to agree as you will be repaying back your debt in full
  • It’s possibly that creditors may freeze interest and charges on your debts
  • Using a third party means you have less contact with your creditors
  • DMP’s are flexible to your situations

Disadvantages of a DMP

  • The payment terms are normally longer so it can take a while to pay back your debts
  • You are liable to pay your debts back in full
  • Your creditors may not agree to freeze your interest and charges
  • Your creditors may not agree to reduced payments
  • Creditors do not need to stop contacting you with this solution
  • Private debt solution companies will charge you a fee for a DMP service
  • A DMP could negatively impact your credit rating

Get in touch with us about a DMP today