What is a debt management plan?
Could a Debt Management
Plan (DMP) be your solution? If
you have debts of less than £14,000,
then a DMP
could be right for you!
- Reduce your monthly repayments
- We handle negotiations with all creditors
- You must be able to afford a £100 payment each
month
Debt Management Plans are provided by debt management
companies, like our sister company Abacus, who negotiate with your
creditors to change your debt repayment terms.
Debt Management Plans (DMPs) can be a good debt solution,
especially if your problems are likely to be short term.
In a debt management plan we will negotiate with your creditors to
try to get them to accept lower repayments and obtain interest
freezes. We are often able to do this We take one affordable
monthly payment from you and pass the money to your creditors less
our initial and, thereafter, monthly fee.
Start Debt
Analyser »
Taking the two-minute ClearDebt Analyser test now will give you
a personalised initial assessment of whether a debt management plan
could be right for you!
What is debt management?
Debt Management Plans are provided by debt management companies
who negotiate with your creditors to change your debt repayment
terms. Debt Management Plans (DMPs) can be a good debt solution,
especially if your problems are likely to be short term.
Increasingly, especially if you don't owe very much in total,
creditors may ask you to try debt management before being
considered for an IVA.
A debt management plan can be put in place by a debt management
company or made by yourself ("self help debt management").
Sometimes commercial and charitable debt management plans are
simply a step on the road to bankruptcy, offered to debtors who are
terrified of the word insolvency. However in many circumstances
they can be an appropriate solution, especially if you can nearly
pay all your debts or if you strongly believe your problems will be
short term.
Debt Management Companies
Commercial debt management is similar to self help debt
management except that someone else is doing it for you. There are
many different firms offering this service and most charge a fee.
Some are overtly commercial; some (even a major charitable one) are
funded by the banks and credit card companies themselves.
Debt Management
Debt management firms will usually ask you to pay them as much
as you can afford. They may negotiate with your creditors to accept
lower repayments or obtain interest freezes.Commercial Debt
Management companies are often able to do this - it isn't only the
debt management charities that succeed here. They pass the money to
your creditors less their initial and, then, monthly fee. This is
usually around 15%-18%.
Self help debt management
Self help debt management involves you renegotiating your
payment terms with your creditors. If your debts are not so serious
and you approach your creditors first to deal with your problems
you will usually find them sympathetic and helpful to you. If you
leave the debt management process until they threaten to take
action against you it is often much harder to negotiate with them.
You need to be tough to negotiate a good deal - often; they will
refer you to a debt management organisation in any case.
Take care though; some of the debt management plans we have seen,
even from the more public-spirited providers, are scheduled to last
more than 10 years and often only reduce debt by small amounts,
compared with an IVA which, usually on a very similar monthly
payments, ensures you are debt free, more often than not, in five
years.
Start the Debt
Analyser to check if I qualify »
