Debt Management Plans

What is a debt management plan (DMP)?

It is a formal Debt Repayment Plan that involves a debt management company working closely with the debtor to reach an agreement on how much they can afford to pay each month.

The monthly payment is then apportioned pro rata to the people you owe money to, based on the level of debt.

The debt management company will work as a mediator with your creditors and negotiate sensible repayment terms until all parties are happy with the decision.

Interest will usually be suspended whilst the debt is being paid.

This is not a legal agreement, and as such is not legally binging on the Lenders, who can still proceed to legal action at any time, if they choose.

However, in practice, the Lenders are usually happy to honour a DMP in the knowledge that they are getting regular monthly repayments.

How will I know my creditors are being paid?

Your creditors will continue to send you statements.

As long as you send your payments to the debt management company, these statements will show payments from you, who is being paid and by how much.

What does it cost?

There is a monthly management fee for the plan and will depend on the amount paid each month.

However, the charges will be taken from your monthly debt payment, before it is apportioned to your creditors.

These charges will be fully explained before such a plan commences.

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