The Facts: DMPs

Written by PayPlan on 8 February 2018

What is a DMP?

A DMP, Debt Management Plan, is an informal arrangement between you and your creditors, managed free by PayPlan.

To pay your debts back, you pay one single monthly payment, as part of your plan, which goes toward repaying your unsecured debts. There is no guarantee that interest and/or changes will be frozen. If they aren’t frozen, it will result in paying back more over a longer period of time.

How much does it cost to set up a DMP?

Nothing, if you choose PayPlan, it’s completely free.

There are other debt management companies that charge by either requiring a set-up fee, or a monthly management fee.

PayPlan can offer DMPs to you for free as many creditors recognise our success at arranging debt repayment solutions that our clients can afford to repay, and agree to a small donation to us for providing this service to you.

This is what allows us to offer completely free Debt Management Plans. So whatever you can afford to pay each month goes directly to your creditors to reduce your level of debt even quicker.

Who informs my creditors about the DMP?

One of the benefits using PayPlan for a DMP is that we will contact your creditors, explain your situation, show them your income and expenditure and make an offer of payment to them, on your behalf.

Pros and Cons of DMPs

DMP Pros: DMP Cons:
Annual Reviews
  • PayPlan review your situation annually and make relevant updates
Request
  • PayPlan will ask your creditors to freeze interest and charges when sending offer of repayment
  • However, there is no guarantee they will be frozen
Sustainability
  • Monthly repayments are set at a level you can realistically afford, after all your essential living costs and any priority payments have been accounted for
Support
  • PayPlan will manage your debt plan and liaise with your creditors on your behalf, which should reduce the level of contact you receive from them
Fair way of sharing payments
  • Payments are distributed on a pro-rata basis
Excessive expenditure
  • Creditors may measure income and expenditure using guidelines of what they consider to be acceptable, which means that they could query or ask for justification of any expenditure which they consider to be excessive
Credit file
  • Your credit file will be affected for maximum of 6 years after the DMP is completed
Protection
  • You will still be open to further action on your accounts, such as legal action.
  • There is no protection for your assets.
Repayment
  • You remain fully liable to pay your debts until they are paid in full. This means it is likely to take longer and cost more than alternative debt solutions.

Other useful facts:

  • Any change in circumstances may alter the length of your plan
  • Early settlement is available if you wish to pay a lump sum off your debts or even make a full and final offer if, for example, you receive a windfall
  • A DMP in itself will not show on your credit file, however, if you have recently been experiencing financial difficulty, such as missed repayments, then your credit rating is likely to have been affected by this already.

For immediate and free debt advice please call PayPlan on 0800 716 239 or use our Debt Help Form to submit your debt problem online.

Filed under Debt Facts

This article was checked and deemed to be correct as at the above publication date, but please be aware that some things may have changed between then and now. So please don't rely on any of this information as a statement of fact, especially if the article was published some time ago.

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