What Is A Debt Management Plan?
Written by PayPlan on 4 January 2011Good afternoon bloggers. Now you know who I am, I want to share with you what I do and all that I know. I want to start with the basics so today I will be sharing with you what a Debt Management Plan is. A Debt Management Plan or DMP, as you may know it, is an informal agreement between you and all of your unsecured creditors, you can think of it as kind of a gentlemans agreement. The agreement will last until all of the money that you owe has been repaid to your creditors. A DMP isn’t legally binding therefore your creditors can still apply interest and charges and they can also pursue legal action against you. The way a DMP works is that you will tell them what you earn, what you spend and what is left over at the end of the month, you will then show them what you can afford to pay them, and this is called a financial statement. At the start of the arrangement all or your creditors will receive your financial statement which will show the offer you are making to your creditors. They can either accept this offer or not. If a creditor rejects the offer, payments will still be made to them regardless. Once in your DMP you will send your payments in each month and this is then distributed equally amongst your creditors. By doing this, the hassle is taken away from you so all you need is to make one payment. A DMP will last for however long it takes for you to pay your debts in full. At the start of the plan all creditors will be asked to freeze interest and charges but this cannot be guaranteed and even if they do agree to it, they could change their minds at any time; because of this a time plan cannot be made.
A Payplan DMPYou will be assigned a Case Officer; this person will act as the middle man between you and your creditors. They will look after you during your plan, they will speak to all of your creditors for you and they will deal with all of the correspondence from them, so you don’t have to. You will send your payments into us each month and 100% of this will go directly to you creditors, this is because we are a free service and we do not take any fees or charges. At the beginning of your plan we will ask each of your creditors to freeze interest and charges, whilst we cannot guaranteed that we would be successful, we have a very good relationship with creditors. The main for reason for this is because we do not take any fees ourselves so they know that they are getting all the money from you that you can afford. Once your plan is up and running you will have constant support from your Case Officer until your debts are cleared. We have several different departments dealing with specific area’s that can also assist you whilst in your plan. One of these being our Legal Document Handling, they help deal with any legal action that is brought against you. There are also people dedicated to helping with mortgage arrears also. Remember Payplan offer free DMP’s. All of the money that you pay in goes to your creditors. We do not work for the creditors. We work to get you out of debt and pay your creditors back.
How Is My Surplus CalculatedA lot of questions that come to us are about the surplus, people say that if they have money left over they wouldn’t need help. To calculate your surplus we calculate your basic income, so your basics wages after tax, National Insurance and any other deductions, we then calculate what you spend each month, so your mortgage or rent, utility bills, food, travel and any other costs. This will then leave you with a surplus amount; this is what is offered to the creditors and what you would pay into you DMP. What you need to remember is that you will no longer have your creditor payments to make; they will all be included in your plan, unless you have a car on Hire Purchase or a secured loan which will be accounted for in your expenditure.
The What IfsA creditor pursues legal action? We have a team of people who will deal with all of the paperwork for you. You would just need to send in the claim form and we will do all of the hard work and take the stress away from you. My situation changes? Throughout your plan we will complete regular reviews to make sure your payments are affordable. If things do change, so will you payment.
What do I do now?
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