{"id":10965,"date":"2011-08-08T12:53:06","date_gmt":"2011-08-08T11:53:06","guid":{"rendered":"https:\/\/www.nationaldebtrelief.co.uk\/debt-articles\/?p=10965"},"modified":"2019-08-02T12:57:04","modified_gmt":"2019-08-02T11:57:04","slug":"debt-management-facts","status":"publish","type":"post","link":"https:\/\/www.nationaldebtrelief.co.uk\/debt-articles\/debt-management-facts\/","title":{"rendered":"Debt Management Facts"},"content":{"rendered":"\n

A Debt Management Plan (DMP) is an informal flexible approach for resolving a person\u2019s personal debt problems whereby creditors are repaid in full over a period of time. The rate at which creditors are paid is based on what the person can afford and thus a DMP can last for a long time, depending on the debtor\u2019s personal circumstances. If you engage a Debt Management Company to assist you it can estimate the length of the arrangement, once it has received all your personal information.<\/p>\n\n\n\n\n\n\n\n

You do not have to use a third party to enter into a DMP with your \ncreditors. A debtor can administer his or her own DMP and deal directly \nwith creditors. Such a DMP is sometimes called a self administered DMP \nor a SA DMP or a DIY DMP. However, most people who enter a DMP do engage\n the services of a debt management companies or of one of the charitable\n organisations which offer free advice or assistance such as the CCCS, \nCAB and Payplan. It pays to shop around among the commercial debt \nmanagement companies to ensure that not only is the best advice obtained\n but the full range of financial solutions is adequately explored and \nresearched.<\/p>\n\n\n\n

Because a DMP is an informal process, your creditors cannot prevent \nyou from obtaining further credit while in a DMP. However, it is against\n the spirit of the plan that you should do this and creditors who may \nhave agreed to your DMP in the first place will almost certainly reject \nit if they learn that you have broken the spirit of the agreement in \nthis way. This is because when you entered the DMP, you committed to use\n all of your disposable income to address and repay your pre-existing \ndebts.<\/p>\n\n\n\n

\"Extra<\/figure><\/div>\n\n\n\n

All unsecured debts such as loans, credit cards, store cards and bank\n overdrafts are covered in a DMP and you repay all of such debts over \ntime. On the other hand, your secured debts such as your mortgage or HP \nagreements are prioritized in your income and expenditure calculations, \nso that you do not fall behind on these payments. These secured debts \nhave to be paid in full on an ongoing basis and you cannot fall into \narrears with them.<\/p>\n\n\n\n

The advantages of a DMP can be summarized as follows: creditors \nprefer Debt Management Plans to other processes for resolving financial \ndifficulties; you do not have to release equity from property; you will \nrepay all of your debts; your financial details will not be put on the \nInsolvency Register; you only pay what you can afford and the DMP is \ndesigned to suit your personal circumstances and needs. Remember however\n that creditors do not have to accept reduced payments or freeze \ninterest and charges and there is no guarantee that any existing or \nthreatened proceeding will be suspended or withdrawn and any collection \ncosts incurred by your creditors will normally be added to your debt.<\/p>\n\n\n\n

If you use a Debt Management Company to administer your DMP you will \nhave to pay fees. These fees vary somewhat from one company to another. \nTypically they charge a set up fee equal to your first monthly payment \ninto the DMP which means that creditors receive nothing for the first \nmonth. Thereafter, charges are usually a fixed percentage of your \nmonthly payment. The average monthly charge is 15% with a minimum of \naround \u00a325 and a maximum of around \u00a3100. As you shop around, you will \nfind that charges vary.<\/p>\n\n\n\n

Entering a DMP negatively affect your credit rating although it may \nalready have been affected if you have arrears on any of your accounts \nor if you have a history of missed payments or late payments. Your Debt \nManagement Company negotiates reduced monthly payments to your creditors\n and this means that you will no longer be making the payments \noriginally agreed. Thus the original contracts into which you entered \nwith your creditors will be broken. Notes of these defaults may and \nprobably will be made on your credit file. The credit reference agencies\n retain default records for six years.<\/p>\n\n\n\n

Because a DMP is flexible and informal, it is not as rigid as other \nprocesses and so can react quickly if you encounter a change in your \ncircumstances, for better or for worse. If this happens, you should \ncontact your DMP Company and inform your liaison officer of any changes \nparticularly relating to your income and expenditure or direct \ncommunications from your creditors. Your DMP Company can contact your \ncreditors, communicate any issues that arise from your changed \ncircumstances and propose solutions that satisfy both you and your \ncreditors.<\/p>\n\n\n\n

While most people who enter a DMP are employed you do not need to be,\n provided you have a source of income that is more than you require for \nliving expenses. However, people who have recently become unemployed and\n who are actively seeking employment can consider offering their \ncreditors a short term DMP, particularly when they have good prospects \nof obtaining employment with a reasonable level of disposable income. \nEven people whose entire income is comprised of benefits can offer a DMP\n to their creditors but since their level of disposable income is likely\n to be low, it may well be that an alternative solution such as \nbankruptcy or perhaps a Debt Relief Order might be a more suitable and \nappropriate solution. Other solutions to financial difficulties which \nshould be considered include Individual Voluntary Arrangement, Debt \nConsolidation, Asset Sale & Debt Settlement and Property Remortgage \n& Debt Settlement. The possibility of financial assistance from a \nfamily member or friend should not be overlooked.<\/p>\n\n\n\n

Reputable Debt Management Companies offer complete confidentiality \nand privacy in relation to your DMP. No information about you is \ndisclosed to any outside organizations including your employer. \nParticular care is taken when making contact with you to ensure that \nothers will not find out about your circumstances. Obviously you need to\n behave discreetly yourself in your communications with your creditors \nand with your Debt Management Company to ensure that your employer does \nnot become aware of your DMP inadvertently.<\/p>\n\n\n\n

Insolvency is not a requirement for entering a DMP. It may be that \nyour income combined with your assets is sufficient to pay off your \ndebts in full in accordance with the terms of your contracts with your \ncreditors. For example, you might have sufficient equity in your \nproperty to pay your debts when your income is taken into account but if\n you cannot obtain a re-mortgage, you might have to sell your home to \nrealize that equity. A DMP might provide a means of postponing the sale \nof your home or giving you some breathing space until such time as you \ncan obtain a remortgage on reasonable terms.<\/p>\n","protected":false},"excerpt":{"rendered":"

A Debt Management Plan (DMP) is an informal flexible approach for resolving a person\u2019s personal debt problems whereby creditors are repaid in full over a period of time. <\/p>\n","protected":false},"author":2,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_seopress_robots_primary_cat":"none","_seopress_titles_title":"","_seopress_titles_desc":"","_seopress_robots_index":"","footnotes":""},"categories":[4],"tags":[],"class_list":["post-10965","post","type-post","status-publish","format-standard","hentry","category-debt-management-articles"],"_links":{"self":[{"href":"https:\/\/www.nationaldebtrelief.co.uk\/debt-articles\/wp-json\/wp\/v2\/posts\/10965","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.nationaldebtrelief.co.uk\/debt-articles\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.nationaldebtrelief.co.uk\/debt-articles\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.nationaldebtrelief.co.uk\/debt-articles\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.nationaldebtrelief.co.uk\/debt-articles\/wp-json\/wp\/v2\/comments?post=10965"}],"version-history":[{"count":3,"href":"https:\/\/www.nationaldebtrelief.co.uk\/debt-articles\/wp-json\/wp\/v2\/posts\/10965\/revisions"}],"predecessor-version":[{"id":10981,"href":"https:\/\/www.nationaldebtrelief.co.uk\/debt-articles\/wp-json\/wp\/v2\/posts\/10965\/revisions\/10981"}],"wp:attachment":[{"href":"https:\/\/www.nationaldebtrelief.co.uk\/debt-articles\/wp-json\/wp\/v2\/media?parent=10965"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.nationaldebtrelief.co.uk\/debt-articles\/wp-json\/wp\/v2\/categories?post=10965"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.nationaldebtrelief.co.uk\/debt-articles\/wp-json\/wp\/v2\/tags?post=10965"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}