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What is an Debt
Management Plan?
A DMP or Debt Management Plan is an informal agreement with your
creditors.
It allows someone who is in financial difficulty to reduce the amount
they pay to the creditors each month so that the payments fit within an
affordable monthly budget. |
Using this
solution will enable you to start repaying your creditors without having
to borrow more and constantly “Rob Peter to pay Paul”.
It is not a legally binding document however and has no fixed term.
This means it can last several years as you have to pay back the full
amount of your debt.
It can be a useful temporary solution if that is what you need.
Is it right for me?
Informal Debt Repayment Programmes are suitable for debts of any size,
provided your monthly repayment is reasonable to creditors.
Vincent Bond & Co Ltd will discuss the suitability of this option with you
in the context of your personal circumstances.
If you cannot afford to do an IVA and are keen to avoid bankruptcy then
this is the next available scheme.
It is good if you need a temporary solution, e.g.until your job changes,
wife goes back to work or your children finish nursery.
Sometimes people do a Debt Management Plan for a few months until an IVA
is suitable for them.
Advantages of a DMP
• Reduce monthly payments to a single affordable amount.
• Repay Creditors within a budget you can afford without having to
borrow more.
• Stop robbing Peter to pay Paul.
Disadvantages of a DMP
• You will normally have to repay 100% of all your debt which may take
many years.
• Your debt repayment period may be significantly increased as you are
paying less off your debt each month.
• Default notices will be recorded on your credit file. This will mean
that you will find it difficult to get further credit until your debts
are repaid or settled in full.
• Creditors are not under any legal obligation to suspend interest or
late payment charges.
• Secured debts (i.e. mortgages and car HP) and Crown Debts such as
Council Tax can not be included in an Informal Debt Repayment programme.
What will a DMP cost?
You may be able to get help with an informal debt management programme
for free. However, most companies who provide these services will make a
charge. This is normally the first two payments that you make and also an
ongoing monthly management fee of between 10-15%.
The amount you can afford to pay to your creditors each month is known
as “Disposable Income”. This is calculated by taking your total monthly
household income and deducting all reasonable living expenses. The money
left over is called Disposable Income. This is the amount which is paid
to your creditors each month. An informal Debt Management Plan can
normally be managed for you so that you are able to make a single
affordable monthly payment which will cover all of your creditors. |
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Vincent Bond on the BBC more |
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Vincent Bond on the BBC more |
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Thankyou so much for the chat yesterday, you really put my mind at ease. It was so refresh ... more
27 July 2010
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Thank you so much for all you help and support, thanks to you my IVA has been accepted and ... more
25 July 2010
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Excellent very supportive will follow advice and be back in contact in near future ... more
22 July 2010
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do not think louise could improve on the help she has given me , nor the time and speed as ... more
22 July 2010
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Tracey, you cannot do anything better than you you do now. Fantastic person to deal with, ... more
21 July 2010
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It's just nice to know there's a place like Vincent Bond for people to go to as an alterna ... more
20 July 2010
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the service i have had has been great and helped me a lot. this is the first time i have b ... more
17 July 2010
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It's such an embarrasing subject and being so young and in debt I wondered what would they ... more
17 July 2010
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Keith was professional from the first moment we spoke. He understood the circumstances I w ... more
14 July 2010
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After being with another organization and seeing how they treated me like a number, it is ... more
11 July 2010
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