Posted by admin on May 18, 2010
A Debt Management Plan, or DMP as abbreviated, can be a useful solution to a person with debt difficulties.
DMP’s enable the debtor to afford a single monthly repayment for unsecured debts while at the same time prevent the build up of fees, interest and late payment charges to their balance.
Not everybody is eligible for a Debt Management Plan, however. DMP’s are available to residents living in the UK (England, Scotland, Wales and Northern Ireland) and they are for unsecured credit only. Therefore secured debt such as mortgages, car finance, hire purchase and leases for example are excluded and will need to be paid as usual.
The money that is paid to creditors from the single repayment will usually equal a person’s surplus disposable income. In other words the money left from your income after paying secured debts, rent, mortgage and bills.
To be able to receive a DMP agreement with creditors you must:
– Not be able to meet your existing credit repayments;
– Be able to afford at least £100 per month for unsecured credit repayments;
– Have unsecured consumer debts of at least £8,000 in total. Please note that secured debts cannot be included in this total nor can Student Loan Company payments or Council Tax arrears.
– Have unsecured debts from a minimum of three separate creditors.
If the above conditions are met then a debt professional will be able to act on your behalf to try and approve a Debt Management Plan from your creditors.
The plan can be exited at your will if your financial position improves; however if this does not happen the debt professional will monitor your circumstances to ensure that the monthly repayments represent a fair amount for creditors depending on changes in income.