A debt management plan, or DMP, is an informal debt restructuring solution for unsecured debt. If you have debts above £1,500 and owe money to more than one creditor then a Debt Management Plan could be right for you!
In a Debt Management Plan we enter into negotiations with your creditors on your behalf with the aim of getting them to accept lower repayments. We will also work to obtain a freeze on any further interest that might otherwise be added to your current debt.
In a lot of cases we are able to do this and, when not all creditors agree to this at the start, we will continue to negotiate with your creditors whilst you keep up the payments to your Debt Management Plan.
Here are some of the key features of a debt management plan:
A Debt Management Plan enables us to take one affordable monthly
payment from you instead of the multiple payments you might
currently be making. We ensure that this single monthly payment is
affordable for you because we calculate it against guidelines
that make sure you have what you need to live (things like
your housing costs, children's needs, etc are all taken into
account: the guidelines we use have been agreed with
creditors and are usually accepted).
We then distribute your single monthly payment to all your creditors proportionately based on the amount they are owed - this means everyone gets their fair share. Within these payments we do deduct an initial and, thereafter, an ongoing monthly fee (you can read more about our DMP fee structure here: Debt Management Plan Fees)..
It's worth noting that there can be some negative aspects to a Debt Management Plan, and you can read more about these here: Debt Management Plan Pros and Cons.
We've compiled a list of the most frequently asked questions about debt management plans, you can view them all here: Debt Management Plan FAQ