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First Class. I was in was in a mess with my debts, but the way they sorted out all my problems and made life less stressful was great. The service and speed in which they sorted my IVA was superb.
. . .Andrewvia TrustPilot
What is a Debt Management Plan?
A Debt Management Plan or DMP is an informal debt solution where you pay back your debts at an amount that is affordable to you. It is suitable for anyone with debts above £1,000 and owing to more than 1 creditor.
You agree with your creditors to pay lower monthly repayments than what you are currently being asked to pay. Unlike an IVA, a DMP is not legally binding so you can pay the debts until they are paid in full or until your circumstances change. You or your creditors have the ability to opt out of the arrangement any time.
A Debt Management Plan can be negotiated by yourself or through a Debt Management Company, who might have more sway when it comes to negotiating with your creditors and they may be able to get interest and charges frozen. Be careful when choosing a Debt Management Company as they can have a great variation in the types of fees they charge.
If you would like to find out more, fill in the form and one of our advisors will call you for a chat or scroll down the page for more information.
What are the benefits of a Debt Management Plan?
An Informal agreement that can be stopped at any time as your circumstances change (for better or worse).
Interest & Charges could be frozen if creditors agree.
Creditor pressure is eased as your creditors will deal with the Debt Management Company.
You will have 1 easy monthly payment to cover all unsecured debts.
A Debt Management Company will negotiate with creditors on your behalf, so offers are more likely to be accepted and interest frozen than if you try to do this yourself.
A Debt Management Company will help you prepare your plan, including agreeing the level of your household and personal spending based on guidelines, which can then be used to put your case to the creditors.
What are the disadvantages of a Debt Management Plan?
Can remain on credit file for sometime after completion if a default notice has been issued.
If your creditors refuse to freeze or reduce interest this can lead to increased debt level as repayments are less than original contractual payments. Any further collection actions may incur costs that will normally be added to the debt.
Debts will be repaid over a longer period of time than if contractual payments were made.
You will repay debts until they are paid in full.
Repaying debt over a longer period may increase the total amount to be repaid.
Your ability to obtain credit will be affected in the short term and might be affected in the medium to long term.
How long does a Debt Management Plan last?
The length of a Debt Management Plan depends on your individual circumstances. You can remain in a DMP until your debt is cleared or you may want to only use it for a short time until you get on top of your finances. If you want to use a DMP until your debt is cleared then your debt management company should be able to give you an approximate date of completion.
If you do a DMP through a Debt Management company they will be able to review your circumstances and your financial situation to see if it is a suitable option. They will draw up a repayment plan that you can afford and will contact your creditors and ask them to agree to it. Usually your creditors will accept the lower payments if it's the best way for you to repay the money you owe and they may also agree to reduce or freeze interest and charges, so you can focus on paying off the debt itself.
If you would like information about how you can deal with your debts contact us at IVA Northern Ireland and we may be able to help.
Is a Debt Management Plan the same as a loan?
No. A Debt Management Plan is not a loan. You are not borrowing any money. You are simply arranging with your creditors to repay your debts at a rate you can afford by means of affordable monthly repayments.
Will I be credit checked?
A Debt Management Plan is not a loan, so you will not have to be credit checked to qualify for one.
Will I keep getting letters and phone calls from my creditors?
A Debt Manangement Plan is an informal arrangement and isn't legally binding, so your creditors cannot be stopped from contacting you. You may still receive letters and phone calls from time to time. However, these letters and calls should become less frequent the longer the plan is in place and the creditors realise they are receiving regular payments. If you do receive any calls or letters you should be able to direct any correspondence to your Debt Management Company to deal with.
Can I pay more or less if I want to change payments?
Because the plan is informal you can alter your payments to suit your circumstances. If your circumstances change you can raise or lower your payments. Obviously the more you can pay back regularly the quicker you will be able to pay off your debts.
Do I need to change banks?
If your current bank is one of your creditors then you should change your bank account to one that you do not owe any money too. If you fail to do this there is a possibility that when your wages are paid into your current bank account they will keep your money and offset it against what you owe them.
Do I need to cancel my direct debits?
You should cancel your direct debits to your creditors to avoid the possibility of them being paid twice. However, you should continue to pay your normal household bills, car insurance etc.
How will I know my creditors are being paid?
You will continue to receive statements from your creditors showing the balance on your accounts. This is your opportunity to confirm they have frozen the interest and charges on your accounts.
Will this affect my credit rating?
It is more than likely that the debt management plan will have an effect on your credit rating as you will not be making your contracted repayments. However, if you are seen to be making regular payments through your plan then this should be seen as a willingness to address your debts. You should bear in mind that if you are currently experiencing debt problems it is a possible that one or more of your creditors may have already recorded this information with a credit reference agency such as Equifax or Experian. You can check your credit rating by visiting their websites.
Does it make a difference if I am a homeowner?
It makes no difference in a Debt Management Plan whether you are a tenant, homeowner or live with your family.
First Class. I was in was in a mess with my debts, but the way they sorted out all my problems and made life less stressful was great. The service and speed in which they sorted my IVA was superb.