Debt Management Plan
What is Debt Management Plan?
What is a DMP?
A DMP is an agreement that can be made between you and your creditors (people you owe money to) if you’re unable to make payments on time. It allows you to pay a smaller amount each month than originally agreed. You’ll still have to pay off all your debt, but you can do it more slowly.
Click “GET IN TOUCH” to start your journey, one of our friendly team will then be in touch to give you all the information you need to deal with your enquiry and refer you to one of our regulated associate experts.
We may pass you onto a FCA regulated debt advice firm for a full advice call who would look into a range of options for you, May not be suitable in all circumstances fees may apply.
We are a debt help lead generation organisation & may be paid a referral fee from the FCA regulated firms.
Who can get a DMP?
Being approved for a DMP depends more on your disposable income than the amount of debt you have (your disposable income is the money you have left over after paying living costs, such as rent, food and energy bills).
To get a DMP, you’ll usually need to:
- Have disposable income to make reduced monthly payments
- Be able to make large enough payments that you can clear your debts in a reasonable amount of time (your DMP provider will advise you on how long this is)
- Not have enough disposable income to completely repay your debts within six months
What types of debt can be included in a DMP?
Only ‘non-priority’ debts can be included in a debt management plan, such as:
- Bank loans
- Credit cards
- Overdrafts
- Water bills
- Catalogues Buy Now/Pay Later Debts
Debts that can’t be included in your DMP are called ‘priority’ debts, because there are more serious consequences for not paying them. These include:
- Mortgages
- Overdue payments for rent, gas, electricity, council tax or child support
- Magistrates' court fines
- Overdue income tax or VAT
- TV licence fees
How does a DMP work?
To set up a DMP, your creditors must agree to it. It may be in their best interests, as a DMP can help lenders get their money back.
A DMP isn’t legally binding, so it can be cancelled at any time by either you or your creditors. You may use a DMP provider who’ll give you debt advice, deal with creditors, and calculate your payments.
Once you start your DMP, you’ll only have to make one payment each month to cover all debts included in the plan. Your provider will split this money between your creditors. You’ll continue to make these payments until either your debts are cleared or you’re able to make the full, original payments again.
How long do DMPs last?
The length of DMPs can vary hugely. How long your DMP lasts will depend on how much debt you have, and how much you can afford to pay off each month. But it’s not unusual for DMPs to last between five to 10 years.
If your DMP involves you making repayments less than the amount originally agreed with lenders, then it will affect your credit score. This means you could find it harder to get credit while making reduced payments.
How will a DMP help me with my life?
A debt management program may benefit your personal and financial life by:
- Reducing stress. It can be relieving to have lower, simpler payments, and someone to deal with your creditors for you.
- Creditors who agree to your DMP are less likely to take legal action against you to get their money back, since they know you’re trying to sort out your debt.
- Getting you back on track. A DMP can help you clear your debts and improve your financial situation in the long term.
Who can get a DMP?
Being approved for a DMP depends more on your disposable income than the amount of debt you have (your disposable income is the money you have left over after paying living costs, such as rent, food and energy bills).
To get a DMP, you’ll usually need to:
- Have disposable income to make reduced monthly payments
- Be able to make large enough payments that you can clear your debts in a reasonable amount of time (your DMP provider will advise you on how long this is)
- Not have enough disposable income to completely repay your debts within six months
What types of debt can be included in a DMP?
Only ‘non-priority’ debts can be included in a debt management plan, such as:
- Bank loans
- Credit cards
- Student loans
- Water bills
- Benefits overpayments
Debts that can’t be included in your DMP are called ‘priority’ debts, because there are more serious consequences for not paying them. These include:
- Mortgages
- Overdue payments for rent, gas, electricity, council tax or child support
- Magistrates' court fines
- Overdue income tax or VAT
- TV licence fees
How does a DMP work?
To set up a DMP, your creditors must agree to it. It may be in their best interests, as a DMP can help lenders get their money back.
A DMP isn’t legally binding, so it can be cancelled at any time by either you or your creditors. You may use a DMP provider who’ll give you debt advice, deal with creditors, and calculate your payments.
Once you start your DMP, you’ll only have to make one payment each month to cover all debts included in the plan. Your provider will split this money between your creditors. You’ll continue to make these payments until either your debts are cleared or you’re able to make the full, original payments again.
How long do DMPs last?
The length of DMPs can vary hugely. How long your DMP lasts will depend on how much debt you have, and how much you can afford to pay off each month. But it’s not unusual for DMPs to last between five to 10 years.
If your DMP involves you making repayments less than the amount originally agreed with lenders, then it will affect your credit score. This means you could find it harder to get credit while making reduced payments. We cover this in more detail below.
How will a DMP help me with my life?
A debt management program may benefit your personal and financial life by:
- Reducing stress. It can be relieving to have lower, simpler payments, and someone to deal with your creditors for you.
- Protecting you. Creditors who agree to your DMP are less likely to take legal action against you to get their money back, since they know you’re trying to sort out your debt.
- Getting you back on track. A DMP can help you clear your debts and improve your financial situation in the long term.
