What is a Debt Management Plan?
A Debt Management Plan is an agreement that is made between you and your creditors to help control and pay all your debts.
Debt management plans are usually used when either:
- you can only afford to pay creditors a small amount each month.
-you have debt problems but will be able to make repayments in a few months.
You can arrange a plan with your creditors yourself or through a licensed debt management company for a fee. If you arrange this with a company: you make regular payments to the company. The company shares the money out between your creditors.
- One affordable payment to the DMP company – if you use a licenced debt management company.
- Flexible – payment can move, increase or decrease depending on circumstances.
- Creditors may agree to reduce payments and freeze interest and charges, but are not obliged to.
- Certain charities and organisations will do this free of charge, you can contact the MAS for more information.
- Your debt is not fully written off unlike an IVA, Trust Deed, or Bankruptcy
- Only interest and charges can be frozen, but there is no guarantee
- We cannot provide any legal protection from your creditors
- It could take many years to fully pay off your debts as you will be making lower monthly payments
- It will affect your credit rating
Which Debts Can I Pay With a DMP?
Debt Management Plan is a debt solution that primarily covers non-priority debts. These include:
- Your Overdrafts
- Your Personal Loans
- Money You Borrowed from Friends and Family
- Bank or Building Society Loans
- Credit Card, Store Card and Payday Loans
- Catalogue, Home Credit or Store Credit Debts