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How long does it take to set up a DMP?

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Dealing with significant debt can be a daunting challenge. One potential solution is a Debt Management Plan (DMP): an agreement between you, your provider and your creditors that allows you to combine multiple debts into one monthly payment. Your DMP provider will handle the rest, giving you some much-needed breathing space.

On average, setting up a debt management plan can take anywhere from a few days to a few weeks, though the precise time scale can vary. If you are considering a DMP or are curious about the process, read on. We’ll share answers to common questions such as how to set up a DMP, how long it might take and what happens next.

How do you set up a debt management plan?

Setting up a debt management plan begins with a thorough understanding of your financial situation. It’s not just about knowing how much you owe but also understanding your monthly income, necessary expenditures, and other financial commitments.

Finding the right debt management company is crucial. You can do this by researching online or asking friends and family for recommendations. It’s essential to find a company that is FCA authorised and has a good track record. Most providers will charge a fee, so take this into account.

When you contact the company, they’ll provide advice about the right financial solution for you based on the information you give them. If they agree that a DMP is the way forward, they’ll start the process of setting it up.

How long does it take to set up a DMP?

Setting up a DMP typically takes anywhere between one to three weeks. However, the timescale largely depends on the individual’s specific circumstances, as well as the efficiency of the DMP provider. Here is an outline of the steps involved:

Stage 01. Initial Conversation

After finding a suitable Debt Management Plan provider online, a specialist adviser will contact you to discuss your current financial situation. From here the specialist can make a recommendation as to whether a DMP is the best option for you or not.

Stage 02. Sending Documentation

If it is decided that a DMP is the best option, you’ll need to provide detailed further information or documentation so that they can create a realistic and bespoke payment plan. This may include:

  • Proof of income and expenditures (e.g. payslips, bank statements)
  • Information about the types of debt you have, including priority debts and non-priority debts
  • Your credit account numbers
  • Details of any other financial commitments
  • Confirming your method of payment

This may be done online, in person, or over the phone, and typically takes no more than a few hours, depending on how long it takes you to find and supply the required documents.

Stage 03. Drafting the Agreement and Signing a Letter of Authority

Once the company has the necessary information, they’ll calculate what you can afford to pay each month. A Letter of Authority will be sent to you for you to sign and return if you wish to proceed. You will also be sent a copy of the DMP agreement, which you should review carefully. Ensure all the details are correct and that you’re happy with the terms & conditions (including the monthly repayment and fees).

Stage 04. Contacting your Creditors

Once you have confirmed that you wish to continue, your Letter of Authority will be sent to your creditors, asking them to confirm the debt amount and providing a repayment offer for them to consider. You should be kept informed of the responses and any further updates when available; you may still receive contact from your creditors while this happens. You can forward creditor correspondence to your DMP provider for them to deal with.

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What could cause delays with your DMP provider?

Setting up a DMP can be a complex process, and sometimes, delays are inevitable. Understanding potential pitfalls can help you be better prepared:

Missing or incorrect documents

Negotiations with stubborn creditors

Changes in your financial circumstances

Delays in communication between the DMP provider and creditors

Being proactive and providing accurate information can help to minimise delays. You should also avoid making any drastic changes to your finances during the process (such as taking on more debt).

What happens after the DMP is set up?

Once you have set up your DMP, you’ll no longer have to pay back each of the debts included in the plan individually. Instead, you’ll only have to make a single monthly payment to your DMP provider, which will then be distributed between your creditors. The first payment should be processed within a month of setting up the agreement.

Your provider will handle liaising with your creditors when necessary. Just make sure you talk to your DMP provider if you are struggling to make payments, as any that are missed may impact the length of your DMP, as well as the arrangements your provider has made with your creditors.

When will a DMP first appear on your credit file?

A DMP is an informal agreement, not a legally binding debt solution (such as a debt relief order). So, it won’t automatically appear on your credit file.

However, it’s possible that one or more of your creditors may add a note to your account stating that you have a debt management plan, or that a new payment arrangement has been agreed. This notation may appear on your report, and if so, it will be visible to future lenders.

When do DMPs start to affect your credit score?

Your credit score is a reflection of your financial behaviour. It’s based on things like your payment history and the number of credit accounts you have.

Unlike a consolidation loan, a debt management plan is not a form of credit, so it won’t have a direct impact on your credit rating. However, if you are paying your creditors less than originally agreed while on the plan, they may still record missed/ reduced payments on your file. This can cause your credit score to drop, though it may improve over time as you continue to repay and eventually pay off your debts in full.

How long does a debt management plan last?

There is no limit to how long a debt management plan can last. Unless you decide to cancel, it will continue for as long as it takes you to repay your debts, which will depend upon:

  • How much you owe
  • The amount you’re able to pay each month
  • Interest rates and charges set by your creditors
  • The debt management company’s fees

Most DMPs last between 1 and 10 years. When you start the plan, you’ll be told how long it will last based on your current circumstances. However, this is only an estimate: it may change over time depending on your financial situation. Speak to your debt adviser if you are unsure.

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Wondering how to get a Debt Management Plan? Contact DFH Financial Solutions

If you need support in managing your debts, don’t hesitate. The longer you wait to get help, the worse your situation could become. With the right DMP provider, you can find a debt solution tailored to your needs, helping you to take control of your finances once again.

At DFH Financial Solutions, we are committed to guiding individuals through their journey to financial freedom. Our team of experts is here to offer you professional advice. Apply for debt help online today or contact us to learn more.

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