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Debt Management Plan or DMP
What is an Debt Management Plan and is a DMP right for me ?
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A Debt Management Plan, or DMP as it is commonly known, is an informal agreement between you and your creditors to pay back your unsecured debts with a monthly payment that you can afford. Your monthly payment is determined by carrying out an analysis of your individual circumstances and seeing what is realistically affordable for you to pay. Read on or click here to find out more. |
By looking at ways of maximising your income or reducing any overspending and by identifying and prioritising your most important debts we can then produce a Financial Statement which reflects your personal circumstances (see section on Debt for details on how to do this).
A DMP can last until your debts are repaid in full or until you or your creditors want to come out of the agreement. It can be a good way for you to reorganise or get on top of finances that have gotten slightly out of control or very unmanageable.
A Debt Management Plan does not have to be produced professionally but, as it is an informal agreement, can be put together oneself and agreed directly with your creditors.
There are, of course, a great many reputable Debt Management Companies who will act on your behalf but we, at www.HelpMeOutOfDebt.co.uk recommend Debt Line
A Debt Management Plan is basically a simple and effective way to pay your non-priority creditors.
Simply put, you (or your Debt Management Company) calculate the amount you can afford to pay after giving consideration to your priority debts - mortgage, utilities, council tax etc and day-to-day living expenses. Any money left is then to be distributed to your non-priority creditors.
Whilst you can put together and agree a DMP with your creditors yourself there are advantages in employing a Debt Management Company - They are highly experienced and will negotiate reduced payments on your behalf with your creditors. In many cases the creditors will also agree to totally freeze or reduce the amount of interest being charged on your accounts.
A DMP organised and agreed through a Debt Management Company will give you:
- Professional assistance in dealing with your creditors
- The management company will handle and reply to all creditors letters and enquires
- Payments you can afford and a reduction of your debt
- You make only one payment direct to the DMC. They divide the payment fairly between all your creditors
- Regular reviews of your circumstances and your monthly financial circumstances
A DMP can only cover unsecured debts or arrears.deposit amount changing to reflect your situation.
Debt management plans are not legally binding so creditors do not have to agree to repayment schedules. However, if the arrangement works well the creditors will be happy to co-operate.
When choosing a debt management company though be careful! Companies offering this service vary greatly. Some companies charge you fees for putting together a DMP whereas other companies pass the cost onto the creditor so you do not pay up-front fees. Also, make sure that the company you choose will send you regular statements if you require them. This is to ensure that the payments to the creditors are actually being paid regularly and are not simply gaining interest for the debt management company. That saying though, there are some very good DMCs, as ever...... use the search box below or check out the ads and shop around to find the right one for you.
www.HelpMeOutOfDebt.co.uk recommend Debt Line:
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Debt Management Plan