| A Debt Management Plan (DMP) is one of the most popular debt solutions offered, it is an arrangement that Your Debts Cleared will implement between you and your creditors. A Debt Management Plan (DMP) is an informal way to negotiate with your creditors and agree an affordable monthly payment you can afford until your debt is repaid. When the Debt Management Company negotiates with your creditors they will endeavour to have the interest and charges being applied on your accounts frozen and stopped, however this is not a guaranteed. |
| What are the Pros and Cons of a Debt Management Plans (DMP? |
Pros of a Debt Management Plan (DMP)
|
- You pay one monthly payment to your chosen Debt Management Company who distribute all of your payment on a pro-rata basis to your creditors
- Interest and charges are often frozen, so the debt doesn't increase.
- You only pay what you can afford, based on your incomings and outgoings.
- You will no longer need to negotiate with your creditors alone.
- The Debt Management Company will make all creditor contact on your behalf.
|
| Cons of a Debt Management Plan (DMP) |
- It isn't legally binding agreement, so creditors can proceed with court action (although your chosen Debt Management Company will assist you if this should happen)
- If you are only making a small monthly payment and have a high level of debt, it could take several years to clear your debt. (your chosen debt management company will recommend all alternative solutions if this is the case)
|
| How Do I get a Debt Management Plan? |
| You can start a Debt Management Plan (DMP) by calling our free phone debt helpline and speaking to one of our experience debt management advisors on 0800 692 2000 or you can take our online Debt Test and one of our advisors will call you back |
| What are the steps to set up a Debt Management Plan? |
- Step One – Complete a full fact find with client - This will Your Debts Cleared an idea of where you finances are, such as whom your creditors are, Balances, monthly payments, Income and expenditure.
|
- Step Two – Calculate Your Disposable Income (DI) - Using your financial statement Your Debts Cleared will calculate you Disposable Income (DI). Your Disposable Income (DI) is calculated by minusing you expenditure away from your income (your debt repayments are not included in your expenditure).
|
- Step Three – Paperwork – Your Debts Cleared will then complete your Debt Management application and forward that to you for you to sign. In this paperwork there will be, your financial statement, list of your creditors, terms and conditions and a letter of authority (Your Authority to deal with your debts). All this must be completed and returned back to Your Debts Cleared before we can proceed with the Debt Management Plan.
|
- Step Four – Creditor Contact - Your Debts Cleared will start putting your Debt Management plan in place and start speaking to your creditors only when you have returned you documentation and made your administration payment.
|
- Step Five – Reviews - Your Debts Cleared will conduct annual Debt Management reviews to ensure your Debt Management Plan remains affordable, you must always keep Your Debts Cleared updated with any changes in your circumstances.
|
| How much will a Debt Management Plan – DMP cost me? |
| Your Monthly Debt Management payment is calculated by your monthly income minus and household expenditure (your monthly expenditure does not include debt payments) this is called your Disposable Income (DI), this calculation will be done when you complete your financial statement with Your Debts Cleared. |
| Do I pay any upfront fees on my Debt Management plan? |
| Each Debt Management Company has different administration Your Debts Cleared take your first payment to cover administration costs of putting your Debt Management Plan in place. |
| How Do I pay for my Debt Management Plan? |
| Your Debts Cleared will take payment over the Telephone, Cheques, Bankers Drafts and Giro Slips. The Best way to make your monthly Debt Management Payment is by Standing Order this is simple and stress free. |
| Can I stop my Debt Management Plan if my situation Improves? |
| YES, you can cancel your agreement at anytime. Your Debts Cleared will ask for the request in writing so they can inform your creditors that they are not managing you debts. REMEMBER, don’t cancel your Debt Management Plan if you are struggling with your monthly payments, speak to us and we may be able to reduce your payment. |
| Is my credit rating affected by going on a Debt Management Plan – DMP? |
| A Debt Management Plan will not show on your credit file, however, if you are in financial difficulty your credit rating is likely to have been affected already. Whenever the full contractual payment isn't made, whether this is through a Debt Management Plan or not and even if the payment is just a few pounds short, it will still affect your credit rating as you are not complying with the credit agreement. |
| Will I get Default Notices whilst on a Debt Management Plan – DMP? |
| By entering into a Debt Management Plan your creditors can issue a default notice as you are defaulting on your original credit agreement. If you receive a default it doesn't automatically mean the creditor is going to take legal action. The default will appear on your credit file for 6 years from the date it was issued. A default notice will stop you taking on any further credit, which to be honest may not be a bad thing. |
| Can I still use my credit cards whilst on a Debt Management Plan? |
| NO, you will not be able to use your existing credit cards or store cards whilst you are on a debt management plan. Your creditors will not freeze interest and charges on your debt management plan if you use your cards. |
| Is my home at risk whilst I am on a Debt Management Plan? |
| No, a Debt Management Plan -DMP is an alternative to bankruptcy and isn't legally binding so you won't lose your home if you continue to make the agreed payments into your DMP. It is always the priority of your debt management company to ensure that your property is not at risk and allowances will be made within your income and expenditure to keep up the payments on any mortgages or loans secured on your property. Providing you do this then there is no reason why your property should be at risk. |
| Which debts are included on my Debt Management Plan – DMP? |
| A debt management plan will only help you make reduced payments to your unsecured creditors, therefore the debts that can be included are: Personal loans (loans taken to purchase cars are fine but Hire Purchase (HP) agreements cannot be included), cards ,Store cards, Catalogues ,Overdrafts. Secured debts can't be included in debt management plans because any payments on secured debts that aren't met in full, can lead to the goods being repossessed. This website provides details on house repossession and car repossession, which are all consequences of not maintaining mortgage or hire purchase payments. |
| Why choose a debt management Plan? |
| Debt Management Plans are not an overnight debt solution for people struggling with debt. People wrongly assume that bankruptcy is an easy way out of debt, but it is not. Bankruptcy has long lasting repercussions and is not something that should be entered into lightly. Also, only the most extreme circumstances call for bankruptcy, most problems can be addressed by debt management plans or an Individual Voluntary Arrangement (IVA). If you have debt problem and you are unable to meet the full debt repayments each month, it is likely that without some assistance you will never be able to repay these debts. The consequences of this can be serious and can include County Court Judgements (CCJ), Bailiff Action, and Property Seizure. |
| What will Your Debts Cleared do for me? |
- We deal with your creditors, Calls and Letters
- Manage the day to day running of your Debts
- Conduct annual review to ensure the Debt Management Plan remains affordable
- Help you reclaim your peace of mind.
|
| Call Your Debts Cleared free on 0800 692 2000 or Take our online DEBT TEST |
| |
