A Debt Management Plan (DMP) is an informal repayment agreement between you and your creditors. It allows you to reduce your debt repayments so that you can pay back your creditors at a pace that you can afford.
If you are struggling with your current creditor repayments, but can still afford to make a smaller contribution than originally agreed then a Debt Management Plan could be a good solution for you.
Debt Management Plans are usually arranged for you by a third party – and many charities and organisations can arrange one for free.
How you could benefit:
A single consolidated payment
A lower monthly payment to your creditors based on what you can afford
Frozen interest and charges, wherever possible
We will assist in dealing with your creditors so your contact with them can reduce
On-going support and advice for the life of your plan from your dedicated account manager
Your plan is flexible so payment can change to meet your circumstances
Things to consider:
Unlike some other debt solutions, a Debt Management Plan is not a method of writing off debt.
You must be prepared to repay all of your debt to your creditors.
Creditors do not have to accept a lower repayment amount, however if they do then the overall duration of the agreement will be longer and may increase the total amount to be repaid.
Creditors are not obliged to freeze interest and charges.
Altering your payments will affect your credit rating because they will differ from the original terms agreed with your creditors.
Your credit rating will be impaired and it may be harder to obtain credit in the medium to long term as records are retained by credit reference agencies for six years. A Debt Management Plan is not legally binding, therefore your creditors are still able to take legal action against you if they wish.
Example of a Debt Management Plan (DMP)
Total Debt Level:
Debt Repayments BEFORE DMP:
£345 per month
New DMP Monthly Payment:
£145 per month
Monthly Payment reduction:
£200 per month
This example is for illustration purposes only. Your results will vary based on your personal situation. Reducing debt repayments will increase your repayment term and may increase the total repayable amount.
Get advice before you apply
It’s important to us that all customers make a fully informed decisions regarding their finances. If we think this is the right option for you, we will refer you to an authorised and regulated Debt Management Plan provider to help to deal with your debt problems.