Advantages & Disadvantages of a DMP

Deciding if a Debt Management Plan is right for you depends on careful consideration of the pros and cons for your personal circumstances.

Advantages of debt management plan

Debt management is an informal arrangement that avoids the need for formal insolvency procedures such as an IVA or bankruptcy.
By reaching agreement with your creditors a DMP may suspend actions against you such as CCJ's (County Court Judgments).
Creditors will, in many cases, freeze interest payments.
Your monthly debt repayments may be reduced.

The arrangements are informal. Your creditors can change their mind at any time.
Your credit rating may still be harmed.
While such arrangements reduce your monthly repayments to make them affordable it usually means you will pay more in total over a much longer period.
Interest will usually continue to be charged on your debts particularly on your arrears which may be charged at higher rates than your original loan rate.
Unless your debts are less serious you could end up in debt for a very long time. In the worst case you may find you have no real prospect of getting out of debt and becoming debt free.