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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

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