|
A Debt Management Plan (DMP) allows you to
make reduced repayments to your lenders (creditors) over a
number of years. Payments are made until the debt is cleared
in full or until you are able to make the full repayments
again. The repayments are based on what you can afford after a
realistic income and expenditure has been drawn up.
A debt management company will negotiate
the reduced payments with your creditors on your behalf. The
payments are then made to the management company each month
and are then distributed to your creditors for you.
When choosing a debt management company 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. For more information on Debt
Management, contact us on 0800 074 6918 or email us at:
info@insolvencyhelpline.co.uk.
back to top
The advantages of
a Debt Management Plan:
- You no longer have to deal with your
creditors
- You make payments that you can afford
- Your payments are re-evaluated
frequently so that any changes to your situation can be
taken into account
- You only make one payment a month.
back to top
The disadvantages
of a Debt Management Plan:
- 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.
- A Debt Management Plan may not be
suitable if:
- Your surplus income is low and would
therefore mean that you would be making the repayments for
many years.
- If this is the case there are other
options available such as an Individual Voluntary
Arrangement or Bankruptcy.
For more information on Debt Management,
contact us on 0800 074 6918 or email us at: info@insolvencyhelpline.co.uk.
back to top | 
