Debt Management Plan (DMP)
Do you have a steady income but still struggle to make the payments on your debt after your rent, mortgage and other household expenses? Getting a debt management plan can get you back afloat in no time.
Speak to one of the Debtfix team to help you down this path, or to make a referral to a trusted budget adviser or financial mentor in your area.
How does a debt management plan work?
A debt management plan is an informal debt solution, which means it is not necessarily legally binding, and hence needs structuring properly to give you the protection needed. It is generally entered into following negotiation between a budget adviser or financial mentor that is helping you, and people or businesses that you owe money to.
The repayments proposed should be based on what you can reasonably afford, however quite often all or some of your creditors won’t always accept that amount, even when provided with details of your income and expenditure.
Your budget adviser or financial mentor will invariably need to work hard to get a deal agreed that is sustainable, but one of the biggest problems with a debt management plan is that it won’t necessarily freeze interest or stop charges from being applied, in which case, the debts may just keep on growing, regardless as to how much you pay.
A debt management plan can be very flexible, and very successful, but a lot will depend on your income and outgoings, and on the skills of your adviser.
Who can benefit from a debt management plan?
There are no rules about who is, or is not eligible to enter into a debt management plan, but you will need a third party to negotiate on your behalf, otherwise you will most likely continue to be harassed by creditors directly.
A debt management plan could be the right solution for you if:
you’re struggling to keep up with the cost of your current repayments, but have a steady and relatively stable income;
you can afford to make lower contributions over a long period of time, after paying your priority debts (like your mortgage or rent, and living expenses); or
you feel able to pay off the full value of your debts over an extended period of time.