Top five questions about… Debt Management Plans.

Written by Matthew Brown on 28 January 2013

A Debt Management Plan, or a DMP, is an informal agreement between you and your creditors. When looking for a suitable solution for your debts it can be a daunting experience and many people contacting us have lots of questions. Below we have put together five common questions that we get asked.

How long will my Debt Management Plan (DMP) last?

The length of your Debt Management Plan depends on your individual situation. It also depends on your level of debt and monthly surplus. If creditors freeze interest and charges, the length of the Debt Management Plan can be dramatically reduced.

For example: If you owe £25,000 and you can afford to pay £250 per calendar month the DMP will last for just over 8 years (100 months). This applies only if the payments are maintained each month and the creditors freeze interest for the duration of the plan. Your DMP can be completed sooner if your circumstances improve and your payments can be increased.

How much does it cost to set up a Debt Management Plan (DMP)?

Nothing if you choose Payplan, it’s completely free. As you may know there are many debt management companies that charge by either requiring a start-up fee or a monthly management fee, which can be anything from 15% – 17% of the monthly payment.

Payplan are funded by the credit industry, which allows us to offer completely free Debt Management Plans. This means whatever you can afford each month goes directly to your creditors to reduce your level of debt even quicker.

For example if you can afford to repay £250p/m all of that money will be distributed to your creditors pro rata, Payplan takes nothing out; the full £250 per month will go towards paying your creditors off.

Can I stop my Debt Management Plan (DMP) when I like?

A Debt Management Plan is an informal arrangement between you and your creditors, so you are free to stop the DMP at any time, but we ask that you provide as much notice as possible so we can inform all of your creditors.

If you are experiencing further financial problems and cannot afford the current DMP payments to Payplan, please let us know because we may be able to restructure the Debt Management Plan for you.

Please note: Bear in mind that once the DMP is cancelled, creditors may well resume interest and charges that had previously been frozen or reduced.

Is my credit rating affected if I enter into a Debt Management Plan (DMP)?

A DMP in itself will not show on your credit file, however, if you have recently been experiencing financial difficulty (missed repayments) then your credit rating is likely to have been affected already by this.

To explain this further; whenever the full contractual payment isn’t made, whether this is through a DMP or not and even if the payment is just a few pounds short, it will still affect your credit rating because, if your Debt Management Plan repayment is less than the required repayment as originally agreed, then you are not complying with the original credit agreement you made.

What support do I get during my Debt Management plan (DMP)?

Payplan prides itself on giving excellent support to all our clients. Throughout your Payplan Debt Management Plan arrangement you will have a DMP case officer who will give you a direct number and an email address so you can keep in contact.

If your financial situation changes, you can talk to your DMP case officer who will assess your circumstances and, where appropriate, try and rearrange your Debt Management Plan around your circumstances.

Our members of staff are always there to give support and answer any questions you may have about Debt Management Plans or any other more appropriate debt solutions.

Our website will also give you continuous support, with hundreds of pages of financial knowledge, money saving tips, up to date relevant news and PayplanPlus.


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.

8 thoughts on “Top five questions about… Debt Management Plans.”

  • Christine lowry

    July 7, 2016 at 1:24 pm

    I am looking for a little advice after reading your info posted on here,i have been in a DMP for 3 and a half years with Harrington Brooke’s and my plan doesn’t seem to be reducing and i still have 61 months to go paying £250 a month does this seem correct to you .

    Reply Report comment

    • Jane Clack

      July 11, 2016 at 3:04 pm

      Well – you will be paying a fee so you are not paying £250 a month to your creditors so even if you have been in the plane for 3.5 years you will have paid less to the creditors than the £10,500 you have paid in.
      If you are in a DMP this is an informal arrangement between you and your creditors where the DM company acts as the distributing intermediary. As such this a gentleman’s agreement between you and your creditors and everyone is dependent on the goodwill of the creditors as to whether interest and charges are frozen.

      Contact Payplan and ask for their free advice – totally free, confidential and no obligation and they will advise on the best options for clearing your debts. My email is jane.clack@payplan.com if you wish to discuss things further before contacting our freephone number.

      Reply Report comment

  • Sharon Gill

    February 17, 2018 at 10:55 pm

    I have been on a debt management plan for 6 years I was with a company for just over a year and now I am with credit fix. I have no paper work from the first debt management so I cannot remember who it was but will this not count as I’m now with credit fix

    Reply Report comment

    • Jane Clack

      February 20, 2018 at 3:20 pm

      If you are in an IVA with Credit Fix then all the debts from your DMP should go into this. Have you completed a financial statement with Credit Fix as they need to know who all your creditors are.

      Reply Report comment

  • Anne-laurie Noonan

    July 3, 2018 at 8:16 pm

    I e had a Payplan for my current debt with you previously but defaulted & it closed but I was suffering with bad depression. Could I come back to you and start a new one?

    Reply Report comment

    • Jane Clack

      July 4, 2018 at 6:05 pm

      Of course. If you are now able to restart they would be delighted to hear from you. I would suggest you contact us on the number on the website and explain the situation and your old case number if you remember it and they may be able to resurrect the old plan if the closure was not too long ago but you could also start again – they would need to update all the information anyway. Please give them a call.

      Reply Report comment

  • Jane

    November 16, 2018 at 10:46 am

    I am considering payplan but we are due to remortgage next year and I’m a bit worried it is going to affect being able to remortgage for a better deal

    Reply Report comment

    • Jane Clack

      November 16, 2018 at 5:56 pm

      Hello Jane
      Thank you for your question – if you are due to remortgage next year and you are not behind on your payments so your credit rating is not affected and you can continue to maintain them – or even a little more – then I would advise you to do so. It may have no effect but lenders today want to see what other borrowing is outstanding to ensure it is affordable for you and if you have had to make reduced payments to your creditors this will show on your credit file as creditors can issue default notices if full payments are not made. If it is a temporary need you can always let them know.

      Reply Report comment

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