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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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I was very concerned about joining a debt management program, but once I went through my o ... more
09 March 2010
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Upon speaking to Julia, I felt an immediate sense of economic direction and a great sense ... more
09 March 2010
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Spoke to a few debt advisors and Indra was by far the most professional who put me at my e ... more
08 March 2010
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Louise always responds to you as though you are the only person she has to deal with. Very ... more
08 March 2010
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We have just had our IVA agreed which is a big relief. Our debts got out of control due t ... more
05 March 2010
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My IVA has just been accepted and I would like to thank Keith White for all his help and s ... more
03 March 2010
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Andy was very helpful and very quick to answer any questions i had via email and phone. i ... more
02 March 2010
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Thanks Andy for your help at a very difficult time. Spoke to Andy for the first time in S ... more
02 March 2010
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Louise and I can't thank You and Vincent Bond's associates enough!
Thanks to your supp ... more
01 March 2010
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I was so grateful that i had someone as professional and as helpful as Tracey working on ... more
28 February 2010
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