DMP Advantages and Disadvantages
Debt Management Advantages
- An Informal agreement that can be stopped at any time as your circumstances change (for better or worse).
- Interest & Charges could be frozen if creditors agree.
- Creditor pressure eased as you can direct them to our DMP team.
- 1 easy monthly payment to cover all unsecured debts.
- A debt management company will negotiate with creditors on your behalf, so offers are more likely to be accepted and interest frozen than if you try to do this yourself.
- A debt management company will help you prepare your plan, including agreeing the level of your household and personal spending based on guidelines, which can then be used to put your case to the creditors.
Debt Management Disadvantages
- Can remain on credit file for sometime after completion if a default notice has been issued.
- If your creditors refuse to freeze or reduce interest this can lead to increased debt level as repayments are less than original contractual payments.
- Debts will be repaid over a longer period of time than if contractual payments were made.
- You will repay debts until they are paid in full or until you decide to opt out.
- Repaying debt over a longer period may increase the total amount to be repaid.
- Your ability to obtain credit will be affected in the short term and might be affected in the medium to long term.
DMP FAQs
Below are some of the most frequently asked questions about Debt Management that we are regularly asked. If you have any Debt Management queries that aren't on this page, get in touch and we will be happy to answer them for you.
Debt management is a simple process to reduce and clear all outstanding debts without obtaining further credit. We deal directly with your creditors and negotiate on your behalf. In some cases we can have interest and charges reduced or frozen whenever possible, but this is not guaranteed.
Under a Debt Management Plan you look at your monthly income and essential monthly expenditure (house, car, food, clothes etc). After you have paid for all these essential items any money left is called your disposable income. This is what you can offer to all your creditors to settle your debts.
National Debt Relief advise thousands of people on this every month. We can also manage your debt plan for you. Call us to find out more.
- It is an Informal and flexible arrangement to suit you
- Payments are tailor made to suit your individual needs
- You do not have to release equity from property
- You will repay all of your debts
- The agreement is preferred by creditors
- Your details will not be put on an Insolvency Register
We can deal with all your unsecured debts such as: loans, credit cards, store cards and bank overdrafts. If you are struggling to pay secured debts such as your mortgage or HP agreements we will ensure these outgoings are prioritised in your income and expenditure calculation, so you do not fall behind on payments. We will always suggest ways to deal with your secured and priority debts.
The best way to see if you qualify for a Debt Management Plan, or any of our other debt solutions, is to speak to one of our friendly financial experts. Call us for some advice and we will help you achieve your best possible solution. We strive to help you no matter what your situation. Call us now on 0800 888 666 0
This will depend upon your income, expenditure and personal circumstances. We treat each case individually and will make sure it is tailor made to suit your needs. You will only pay what you can realistically afford. This amount is then paid each month by standing order.
No, but you do need a source of income that is more than you require for living expenses.
We are extremely successful at negotiating with creditors and have a proven track record of getting offers accepted. We would like to make you aware that a creditor does not have to accept a reduced payment or to freeze interest and charges and this may result in your repayment term being extended. There is also no guarantee that any existing or threatened proceedings will be suspended or withdrawn. Any further collection actions may incur costs that will normally be added to the debt.
We have a dedicated Creditor Liaison department who will negotiate with your creditors on your behalf. Your dedicated Finance Manager will keep you informed.
No, National Debt Relief offers a complete guarantee of confidentiality and privacy in relation to your financial affairs. We will never disclose any information about you to any outside organisations and will never say who we are when we call you. This means that you can feel safe in providing your contact information, without the worry that others will find out that you are seeking our help.
We do not charge any upfront fees for our Debt Management Plans. There is no set up fee. When you enter into a Debt Management Plan with us we have a set fee of £25 per month plus £2 per account per lender per month. But the maximum fee you will ever pay is never more than £50 (depending on how much money you are paying into your plan).
For example, if you have a Disposable income of £186 per month (Your Debt Management Payment), and you have 8 creditors, your payment would appear to be: £25 plus £2 account per lender per month = £41
But because the maximum fee for this disposable income amount is £35, then this is the actual monthly fee that would come from your payment and not £41.
See the breakdown of payments below in detail.
| Disposable Income Amount | Maximum Fee |
|---|---|
| £80 - £99 | £25 |
| £100 - £149 | £30 |
| £150 - £199 | £35 |
| £200 and over | £50 |
Yes. As we negotiate a reduction in your monthly payments, and you are no longer repaying the agreed amount to your creditors, a note of this may be made on your credit report. If you currently have arrears or a history of missed payments or late payments your credit rating will already be affected. Records are retained by the credit reference agency for 6 years.
The length of the programme depends on your own personal circumstances. Once we have gathered all your personal information we will be able to estimate the length of the arrangement.
A Debt Management Plan is flexible and informal. We do not want you to ignore your correspondence or contact from your creditors or those acting on their behalf. Once you have joined the arrangement you will have an assigned designated Personal Finance Manager who will deal with your case and any changes in circumstances that may occur.
Types of Debt Management
Monthly Payment Debt Management
This plan will suit people who can afford to offer their creditors a set monthly payment. Under this plan you decide what can be afforded and offer this to your creditors until your debts are repaid in full.
One off / Lump Sum / Debt Settlement Plan
This plan will suit people who have only a lump sum payment to offer where thay can no longer afford to offer monthly repayments. Creditors will normally be open to accepting a lump sum payment as full and final settlement of a debt where monthly repayments cannot continue. It is not uncommon for creditors to agree to write off a portion of the debt owing in this situation. It is important to do it right so that you have a record of everything that has been agreed.
Debt Management fees Compared
We strive to provide you with the cheapest debt management plans. The table below shows a comparison of our fees and rates compared to a few of the other private debt management companies in the industry.
| Debt Management Company | Set up fee | Monthly charge | Min monthly fee |
|---|---|---|---|
 |
No set up fee | £25 plus £2 per account per lender | £25 min - £50 max |
| Money Plus Advice | £399 (monthly management fee also due from month 1) | £46/pm or 49% of your monthly payment | Whichever monthly charge is lower |
| GW Financial | 50% of the first 4 monthly payments (max £700 in total) | 17%, although a short term DMP with a payment of £80/pm will be subject to a fee of 49% | £39.95 min - £90 max |
| DFH Financial Solutions | 49% of the first 6 monthly payments subject to a maximum of £200 (Capped at 50% of set up fee and monthly fee together) |
23.5% of your monthly payment from month 7 | £39.50 min - £100 max |
*All information correct as of 10/07/2023. Information may be subject to change.
DI stands for Disposable Income (the money you have available to pay towards your debts each month)
Debt Management example with fees
Below is an example of a typical debt management plan and the fees charged by various companies. Lets say the client has £9,800 of debts owed to 5 creditors. After analysing their situation, it is determined that they can only afford £250 per month to creditors. We'll assume for this example that each company has successfully managed to negotiate a freeze on interest and charges and the client is going to pay the debt management plan until completion.
- Debts: £9,800
- Number of Creditors: 5
- DMP payment: £250 per month
| Debt Management Company | Set up fee | Monthly charge | Total fees paid | Duration of plan |
|---|---|---|---|---|
|
NO SET UP FEE | £35/pm | £1,610 | 46 months |
| Money Plus Advice | £399 | £112.50/pm for 6 months, followed by £46/pm thereafter | £2,669 | 50 months |
| GW Financial | £500 | £125/pm for 4 months, followed by £42.50/pm thereafter | £2,412 | 49 months |
| DFH Financial Solutions | £735 | £122.50/pm for 6 months followed by £58.75/pm thereafter | £3,555 | 54 months |
Notice from the example above that we are the cheapest debt management company and because we do not add initial fees or added monthly payments, your plan will be completed quicker also.
National Debt Relief will enable you to pay off your debts more quickly and with lower fees. Also, because there is no setup fee if you did decide to cancel early into your plan a large percentage of your payments will not be going towards paying fees.
Things to consider
- Advice is free. A fee is only payable where further services are requested. In a Debt Management Plan we charge a fee to deal with your creditors, distribute payments and manage communications and negoatiations on your behalf. All fees will be explained in detail and discussed prior to commencement of any service or debt repayment plan.
- Repaying debt over a longer period may increase the total amount to be repaid.
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Your ability to obtain credit will be affected in the short term and might be affected in the medium to long term.
- Creditors may still contact you with promotional material or to fulfil contractual obligations to you but they should deal with us in all aspects relating to the outstanding debts.
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Interest and Charges will only be frozen at the creditors’ discretion.