A debt management plan (DMP) is an informal arrangement that can help you pay off unsecured debts, such as credit cards and payday loans, within a reasonable time period.
You could benefit from a DMP if you’re struggling with multiple monthly repayments.
DMPs are managed by debt management firms.
A DMP makes life easier because all your unsecured debt repayments are consolidated into a single, affordable, monthly amount. If a DMP is the best way to manage your debts, we’ll agree your new payment amounts with your creditors and deal with all their letters and phone calls. This takes away much of the stress and hassle of managing your debts, so you can focus on getting your life back on track.
Also, creditors will often agree to reduce or freeze interest and charges on your debts because you’ve committed to paying them off in full. This means your repayments will go towards reducing your balance, rather than interest and charges.
Protocol Debt Management Plans (PDMPs) are a new type of DMP that the government has developed with the Insolvency Service. They were introduced in October 2013. PDMPs are designed to protect people struggling with financial problems from the unscrupulous practices and upfront fees imposed by some debt management companies.
Debts.org.uk does not charge any set-up fee's that means that more of your monthly payment is distributed to your creditors from month one. We also have to assure creditors that all the repayment plans we put forward for consideration are sustainable.
With a PDMP, you don’t have to worry about upfront fees. You and your creditors will have the reassurance of knowing that payments will be made towards your debts from the first month your plan is in place. As a protocol-compliant firm, we’re also committed to distributing each of your payments within the first five working days of receiving a cleared payment from you.
In the event that you pay on a weekly or fortnightly basis, your payments are accrued until you reach your agreed monthly sum in the protected client account.
A DMP is a popular choice for people who want to consolidate several unsecured debt repayments into a single, affordable monthly amount. So if you have some disposable income and can commit to making monthly payments – possibly for several years – it could be an option.
DMPs are flexible as they’re not legally-binding, so you can cancel your plan and switch to another debt management solution in the future. However, their informal nature also means that creditors don’t have to accept them, and they could keep pursuing your debts in other ways. So a DMP isn’t right for everyone.
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