What is a debt management plan? (DMP)
A Debt management plan is an informal debt solution which enables people in debt to consolidate their monthly bills into one low monthly fee.
This is whilst having a representative who is a debt expert to handle all matters relating to the debt on your behalf, this includes dealing with creditors, bailiffs and managing the distribution of funds to your creditors.
Advantages Of A Debt Management Plan
- Informal, flexible arrangement with creditors which keeps the debt managed
- Enables more manageable monthly repayments
- Reduce debts over time
- Often debts owed can be renegotiated but this is not guaranteed
- Easy and fast to setup
- Creditors may agree to freeze charges and interest
Disadvantages Of A Debt Management Plan
- Informal debt solution with no legal protection (no interim order or legal injunctions), creditors can still issue CCJs and chase money by law
- Can be broken if it is not kept to strictly and creditors can still chase
- Creditors are not obligated by law to freeze interest and/or charges
- Credit file may still be affected whilst on the debt management plan