What is a DMP?
If you are struggling with debt or arrears then A Debt Management Plan (DMP) may be beneficial for you. The debts which are managed through a DMP will be paid off in full by providing consistent payments assessed in your agreement.
Based on what you can afford, your payments for the DMP will be calculated. Depending on your creditor, charges/interest can be reduced or frozen. This will either increase or dramatically reduce time needed to complete outstanding arrears/debts
Your DMP provider will typically manage any communication received from creditors included in your DMP.
How does a DMP work?
Your adviser will start by undertaking an assessment to review your circumstances to assess if a DMP is suitable for you. He/She will ask you about the type of debts you have, an overview of your income & expenditure. Once completed, your adviser will then consider all your essential bills such as rent or mortgage, utilities & council tax to clarify what your able to afford to pay. Your adviser will then be able to calculate the approximate time period involved in completing your DMP (based on the amount of debts you have & your position to repay existing debts). If you are able to contribute more in the future, this will help in reducing the time taken to clear the debts.
Your DMP provider will then negotiate assessed monthly payment with your creditors. These monthly repayments will be made to your DMP provider who will distribute this to your creditors at the agreed rate. You will be notified of the fee of the DMP Provider before entering
Freedom Debt Solutions do not provide DMP’s but if you feel it is right for you, we will refer you to a provider who can set one up for you. We do not charge you a fee for giving you advice but we do accept a payment from your DMP provider. This supports our funding and enables Freedom Debt Solutions to continue to provide advice to those in need.
How do I qualify for a DMP?
When your advisor reviews your finances and helps you to assess what your monthly ‘disposable income’ is, you will need to have at least £100 per month to be considered for a DMP (This figure may vary between DMP providers).
There are some debts which can not be included in a DMP. These include fines, tax, student loans, current council tax, selected benefits, gas and electric utility arrears and child support. If you have debts with any of the above you should consider seeking urgent advice.
Is a DMP right for me?
If you are unable to maintain your contractual payments with creditors but do have the ability to pay them at a reduced rate, a DMP may be an option for you.
Managing debts through a DMP will have a negative impact on your credit score as you are not maintaining your contractual payments with your creditors once your debts are managed via a DMP. Your credit report may display the debts being managed through a DMP and will typically do so until the DMP ends or your debt is cleared.