{"id":11549,"date":"2011-09-15T12:46:54","date_gmt":"2011-09-15T11:46:54","guid":{"rendered":"https:\/\/www.nationaldebtrelief.co.uk\/debt-articles\/?p=11549"},"modified":"2020-10-19T17:09:17","modified_gmt":"2020-10-19T16:09:17","slug":"dmp-guide","status":"publish","type":"post","link":"https:\/\/www.nationaldebtrelief.co.uk\/debt-articles\/dmp-guide\/","title":{"rendered":"DMP Guide"},"content":{"rendered":"\n

The trouble with high finance is that it hides its secrets in obscure and confusing language, often making simple matters unnecessarily complex. This is an attempt to keep everything about a Debt Management Plan, a DMP as it is known, short, sweet and simple. You may not like all aspects of DMPs but given that in the UK and Ireland it is the process which is probably most widely used by ordinary people who are struggling to pay their debts as they fall due, it is worth while getting to know its ins and outs.<\/p>\n\n\n\n\n\n\n\n

Debt Management is a simple way of reducing and clearing all your outstanding personal debts without obtaining any more credit than you currently have. You can prepare a Debt Management Plan yourself or you can use the services of a Debt Management Company to help you. If you do it yourself, you will be contacting and dealing with all of your creditors and you will be asking them to accept lower repayments on each of your accounts than you had originally agreed with them. You will be asking them to drop any charges for late payments and to freeze interest on your accounts. You will try to treat all of your creditors fairly and in the same way in your negotiations with them. Alternatively, you can engage a Debt Management Company to do all this negotiation on your behalf.<\/p>\n\n\n\n

\"Credit<\/figure>\n\n\n\n

The good thing about Debt Management is that it is an informal and \nflexible arrangement which is designed to suit your circumstances and \nneeds and the payments you make are tailor made in line with what you \ncan realistically afford to pay. What you pay each month, usually by \nstanding order, depends on your income, your expenditure and your \npersonal circumstances and is calculated to suit your individual needs \nand those of your family and dependents. While you do not need to be \nemployed to enter into a DMP, you do need a source of income that is \nmore than you require for your living expenses. In a DMP you do not have\n to release equity from your property, unless you want to, of course. In\n time, you will repay all of your debts. As well as that, banks and any \nother creditors you may have usually prefer a Debt Management Plan to \nany of the other more formal processes for resolving the financial \ndifficulties of their personal customers. What is more, the details of \nyour DMP will not be put on the Insolvency Register as would happen if \nyou were to become bankrupt or enter into an Individual voluntary \nArrangement. Indeed, if you are discreet, you can keep the fact that you\n are in a DMP from your employer, your neighbours and your friends and \nalthough it might be difficult for you, you may be able to keep family \nmembers from learning about it.<\/p>\n\n\n\n

Of course, there are downsides as well to a DMP, the biggest of which\n is probably the length of time it may take you to complete your DMP. It\n could take ten years to do so but at the end of the day, all of your \ndebts will be cleared. The second most serious drawback to being in a \nDMP is that it will affect your credit rating, although it may already \nbe affected if you already have arrears or a history of missed payments \nor late payments on any of your accounts. Once you or your Debt \nManagement Company negotiates and agrees reduced monthly payments with \nyour creditors, it means that you will no longer be making the payments \nyou originally agreed. It is highly likely that a record of this fact \nwill be made on your personal credit file and these records are retained\n for six years by the credit reference agencies retain such records for \nsix years.<\/p>\n\n\n\n

You should be aware that a DMP does not cover all of your debts. \nThere are certain debts which must be repaid in full as and when they \nfall due. These are your secured debts such as your mortgage, if you \nhave one or your car HP if it applies to you. These \u2018must pay\u2019 debts are\n sometimes called priority debts. Certain other debts such as rent and \ncouncil tax must also be treated as priority debts. Definitely covered \nby your DMP are all of your unsecured debts such as your personal loans,\n your credit cards and store cards any bank overdrafts you may have. \nThese are the debts where you, or your Debt Management Company, hope to \nnegotiate reduced payments, elimination of charges and freezing of \ninterest with your creditors. There is no guarantee that all of your \ncreditors will agree to accept reduced payments or freeze interest and \ncharges and there is no guarantee that any existing or threatened \nproceeding will be suspended or withdrawn. Indeed, any debt collection \ncosts incurred by your creditors will normally be added to your debt. \nNevertheless, the reputable Debt Management Company will have an \nexcellent track record in negotiating with creditors in regard to all of\n these matters, in getting your offer of repayment accepted, and in \nkeeping you informed of progress.<\/p>\n\n\n\n

If you choose to set up and run your DMP yourself, you can keep costs\n to a minimum but don\u2019t underestimate the costs of negotiation and \ncorrespondence by phone and by mail or indeed of your own time. The fees\n of Debt Management Companies vary from one to another. Most of them \ncharge a set up fee equal to the debtor\u2019s first monthly payment into the\n DMP. This means that creditors receive nothing for the first month. \nThereafter, charges are usually a fixed percentage of the monthly \npayment made by the debtor. The average monthly charge is 15% with a \nminimum of around \u00a325 and a maximum of around \u00a3100.<\/p>\n\n\n\n

A DMP will not suit everybody particularly if you are insolvent or \nlikely to become insolvent in the foreseeable future and before opting \nfor a DMP, you should be aware of the many alternative courses of action\n available to people who may be in financial difficulty. The most common\n alternatives are Bankruptcy, Individual Voluntary Arrangement, Debt \nRelief Order, Debt Consolidation, Asset Sale & Debt Settlement and \nProperty Remortgage & Debt Settlement. It may even be that financial\n assistance can be obtained from family or friends on a formal or \ninformal basis.<\/p>\n","protected":false},"excerpt":{"rendered":"

Debt Management is a simple way of reducing and clearing all your outstanding personal debts without obtaining any more credit than you currently have.<\/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":"A Debt Management Plan Guide","_seopress_titles_desc":"","_seopress_robots_index":"","footnotes":""},"categories":[4],"tags":[],"class_list":["post-11549","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\/11549","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=11549"}],"version-history":[{"count":1,"href":"https:\/\/www.nationaldebtrelief.co.uk\/debt-articles\/wp-json\/wp\/v2\/posts\/11549\/revisions"}],"predecessor-version":[{"id":11559,"href":"https:\/\/www.nationaldebtrelief.co.uk\/debt-articles\/wp-json\/wp\/v2\/posts\/11549\/revisions\/11559"}],"wp:attachment":[{"href":"https:\/\/www.nationaldebtrelief.co.uk\/debt-articles\/wp-json\/wp\/v2\/media?parent=11549"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.nationaldebtrelief.co.uk\/debt-articles\/wp-json\/wp\/v2\/categories?post=11549"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.nationaldebtrelief.co.uk\/debt-articles\/wp-json\/wp\/v2\/tags?post=11549"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}