What Debts Cannot Be Included in a DMP?
In this article, we'll look at:
- What are Debt Management Plans?
- Priority Debts: What They Are and Why They Can't Be Included
- Non-Priority Debts: What They Are and Why They Can Be Included
- The Impact of a Debt Management Plan on Your Financial Situation
- Choosing the Right Debt Solution
- The Role of DMP Providers
- The Importance of Staying Informed
- Manage Non-Priority Debts with One Monthly Payment
Debts that cannot be included in a debt management plan (DMP) are those that are considered ‘priority debts’ such as mortgages and secured loans, student loans, court fines, and child support payments. Additionally, some creditors may choose to not participate in the plan, which may prevent you from including those debts in the plan.
Take a look at our guide for more information on what debts can and cannot be included in your DMP.
What are Debt Management Plans?
A Debt Management Plan (DMP) is a debt solution designed to help individuals manage their unsecured debt or non-priority debts by offering a more affordable rate of repayment. It’s an informal agreement between you and your creditors to pay all debts included in the plan. You’ll be responsible for making one affordable monthly payment to your DMP provider who will then distribute funds across your creditors.
Does a DMP have to include all debts?
If you owe money, a DMP can be an efficient way to manage all your debt and combine your repayments into one manageable monthly repayment. Unsecured debts that can be included in a DMP include personal loans, credit cards, catalogues, store cards, and overdrafts. However, not all debts can be included in a Debt Management Plan.
Priority Debts: What They Are and Why They Can't Be Included
Priority debts are those that carry severe consequences if not paid. These include mortgage or rent arrears, gas and electricity arrears, council tax arrears, magistrates’ court fines, arrears of maintenance payable to an ex-partner or children, income tax or VAT arrears, and TV licence arrears.
These debts are considered “priority” because the consequences of not paying them can be more serious than other debts. Priority debts cannot be included in a DMP, so it’s crucial to have a plan for dealing with these debts before setting up a Debt Management Plan.
What kind of debts cannot be included in my DMP?
As mentioned, any priority debts cannot be included in your Debt Management Plan. This includes:
Mortgage or rent repayments.
Secured Loan Arrears.
Any fines or taxes owed.
Mobile Phone Arrears.
Additionally, only debts in your name can be added to your Debt Management Plan.
Non-Priority Debts: What They Are and Why They Can Be Included
On the other hand, non-priority debts are less urgent and include things like bank loans, credit cards, payday loans, and store cards. These debts can be included in a DMP monthly payment, and the DMP provider will help you work out what you can afford to repay and distribute payments to your creditors.
If you’re looking for help repaying your unsecured debts, DFH Financial Solutions may be able to help you. Click below to get started…Apply Now
What debts can go on a Debt Management Plan?
If you’re experiencing any of the following debt, we may be able to help you manage your repayments with a Debt Management Plan.
- Consumer Debt, including Credit Card Debt, Store Card Debt & Catalogue Debt
- Parking Fines (If your fine is from a Private Company)
- Unsecured Joint Debts (Joint DMP)
- Payday Loan Debt
The Impact of a Debt Management Plan on Your Financial Situation
It’s important to understand that while a DMP can help manage your debts, it will also affect your credit rating and your ability to obtain further credit. However, if you’re struggling with debt, your credit rating may already be affected, and the most important thing is to get the help you need to manage your debts.
Choosing the Right Debt Solution
Choosing the right debt solution is crucial to managing your financial situation effectively. A DMP can be a useful tool for dealing with non-priority debts, but it’s not suitable for dealing with priority debts.
Always seek professional debt advice before deciding on a debt solution and remember that while a Debt Management Plan can make your debts more manageable, it’s not a quick fix and will require commitment and discipline to follow through.
The Role of DMP Providers
A DMP provider plays a crucial role in setting up and managing your DMP. They will assess your financial situation, help you work out what you can afford to repay, negotiate with your creditors, and distribute your payments.
The Importance of Staying Informed
Staying informed about your debts and understanding what can and cannot be included in a Debt Management Plan (DMP) is crucial to managing your debts effectively. Always seek advice if you’re unsure, and remember that dealing with debt is a process, but with the right help and support, you can work towards a more secure financial future.
Manage Non-Priority Debts with One Monthly Payment
Debt Management Plans can be a helpful tool for managing non-priority debts, but it’s not suitable for dealing with priority debts. Always seek advice before deciding on a debt solution and remember that managing debt is a process that requires commitment and discipline. With the right help and support, you can work towards a more secure financial future.
As a leading DMP provider, DFH Financial Solutions can help you by designing a bespoke Debt Management Plan. Our informal debt solutions can help you to manage your unsecured and non-priority debts into reduced monthly payments.
We take your unique circumstances into account and will negotiate with your creditors to create a payment plan with monthly repayments that can work for you. We may even be able to freeze interest rates or charges on your debt.
Apply for a Debt Management Plan with DFH Financial Solutions and start your financial journey today.Apply Now