What is a Debt Management Plan?
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A Debt Management Plan (“DMP”) is a debt solution that, for many, may be ideal for their financial circumstances. We’ve put together a guide to managing your debts, to help you decide whether a DMP is right for you.
Do I qualify for a Debt Management Plan?
There is no specific required amount of debt that you need to be eligible for a DMP, you are likely to qualify if:
- Your debts are non-priority
- You can’t afford to pay the contractual amounts to your non-priority debts but you would be able to make reduced payments every month
- It’s possible for you to clear these debts in a reasonable time frame
If you think a DMP may be right for your circumstances, or you want to double check whether you qualify, click the link below to find out if a DMP is suitable for you.
Do I Qualify?Debt Management Plan pros and cons
Like with any debt solution, there are pros and cons. Whether or not a DMP is right for you depends on your circumstances and financial goals. We’ve rounded up the advantages and disadvantages so that you can see at a glance whether a DMP is something you’d like to consider.
Advantages
In most cases, interest and charges may be frozen by creditors. For many people this can help them to focus on repaying their debts, rather than added costs.
It’s more private than bankruptcy or an IVA – with a DMP, you won’t be added to the insolvency register (a public database that anyone could search).
If creditors agree to the DMP, the amount of contact should decrease significantly.
Disadvantages
It only covers non-priority debts, for example credit card debt. If you have debts such as utility bills, and council taxes, then an alternative debt solution such as an IVA may work better for you.
It isn’t legally binding. This means creditors aren’t legally required to freeze interest and charges.
Your credit score will be impacted. Bad credit may impact your ability to get credit in the short-term and possibly the long-term.
If you’d like to find out more about the debt management advantages and disadvantages for your particular personal circumstances, then you can ask to receive a no-obligation consultation with one of our experienced advisors – they can help you work out whether a DMP could help you.
Could a Debt Management Plan help you manage your debts?
Although a DMP has both pros and cons, many people may find that it can help them to pay back their debts in an affordable way which may help to get control of their finances in the long-term.
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