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DMP FAQs

DMP FAQs

Find out more about Debt Management Plans and if they’re right for you by clicking on the Frequently Asked Questions below.

ABOUT DMPs

What is a DMP?
What are the pros and cons of a DMP?
Is a DMP the right debt solution for me?
What is the process of setting up a DMP?
Which debts can be included in a DMP?
Can a DMP protect your assets?
Is a debt management plan a loan?
Are debt management plans legally binding?
Can I enter into a Debt Management Plan (DMP) if I already have a CCJ?
I live in Scotland. Am I able to take out a DMP?

SETTING UP A DMP

How much does it cost to set up a DMP?
How are DMP payments worked out?
How do I make my DMP payments?
How long will my DMP last?
Can I stop my Debt Management Plan when I like?

HELP DURING YOUR DMP

What support do I get during my Debt Management Plan (DMP)?
Will interest and charges be frozen during my DMP?

LIFE WITH A DMP

How much will each of my creditors receive?
Will I have to live on a tight budget during my DMP?
Will I have to tell my partner about my DMP?

YOUR CREDIT FILE

Does a DMP affect my credit rating?
How long does a DMP stay on my credit file?
Can I continue to use credit while I have a DMP?

MOVING FROM OTHER DMP PROVIDERS

Can I move an existing DMP to PayPlan?
My DMP company is closing. What can I do?

DEALING WITH CREDITORS

Who informs my creditors of the DMP?
Will my creditors agree to my DMP payments?
Will I still receive calls and letters during the term of the DMP?
How will I know my creditors are being paid through my DMP?
Can my creditors still issue me with a County Court Judgment (CCJ)?
Will I get a default notice with a DMP?

Content for all of the above FAQ sections is shown below:

ABOUT DMPs

What is a DMP?

A Debt Management Plan (DMP) is an informal agreement between you and the companies you owe money to that allows you to make affordable payments to repay what you owe over a longer period of time.

What are the pros and cons of a DMP?

Visit our DMPs at a glance page to see a full list of the pros and cons of DMPs.

Pros:

  • You’ll be making one affordable payment instead of individual payments to each of the companies you owe money to.
  • A DMP with PayPlan is completely free – everything you pay goes towards your plan.
  • We’ll manage your plan and make sure your payment is split fairly between the companies you owe money to and ask them to freeze your interest and charges to help you clear what you owe faster.
  • We’ll support you throughout the ups and downs, if something changes, we’ll help you to stay on track.
  • Taking steps to repay what you owe in a DMP can improve your credit rating in the long run.

Cons:

  • The companies you owe money to can still contact you while you’re in a plan. You’ll still receive some automated letters while your plan is being set up and there are a few things that they have to send you such as Annual Statements or Defaults.
  • Your credit score may have already been impacted if you’ve missed or made payments less than the contractual amount. In a DMP, you’ll be making reduced payments which will have an impact on your credit score. Any markers, notices or defaults applied to your accounts will show for six years.
  • We’ll ask the companies you owe money to to freeze interest and charges. While most agree to this, some may reduce it instead and some might not agree.
  • There is no protection in your plan to prevent them from taking any legal action against you; if they threaten this, we will support you through the process and try to remedy it.

Is a DMP the right debt solution for me?

A DMP could be right for you if:

  • You’ve got unsecured debts such as credit cards, loans or overdrafts that you’re finding it difficult to make the minimum monthly payments to.
  • You’ve got some money left over after you’ve paid for your household costs and essential living expenses.

There isn’t a one size fits all debt solution, and we know that it’s important to take the time to understand if it’s right for you. We’ll make sure that you have all the information you need on the different ways you can manage your debts so that you can make the right decision.

What is the process of setting up a DMP?

You’ll first have an assessment with one of our advisors – we can do this over the phone, on WhatsApp or Live Chat. We’ll create a budget with you to work out how much you can realistically afford to pay towards your plan.

If a DMP is an option available for you and you choose to go ahead with it, we’ll contact your creditors to explain your situation, and let them know the amount you’ll be paying them through your plan.

You’ll make one payment to us each month, and we’ll do the rest. We’ll distribute your affordable payment fairly between the companies you owe money to.  You can send messages, manage your plan, and keep track of your progress online.

Which debts can be included in a DMP?

The types of debt that you can include in a DMP are personal loans, credit cards, catalogues, store cards, overdrafts and any other unsecured non-priority debts.

A DMP will not include payments to mortgages, secured loans, hire purchase agreements, Council Tax or current utility bills.

Can a DMP protect your assets?

A DMP won’t have any direct impact on anything you own, it won’t protect it, but it won’t put it at risk either. Your budget will prioritise payments for you to make directly to anything you own so that the likelihood of these being at risk is less.

Is a Debt Management Plan a loan?

No, a DMP allows you to repay your debts at an affordable rate, by setting up an informal arrangement with your creditors to make a reduced payment each month. Some creditors may also agree to freeze interest and charges, helping you to get debt-free more quickly.

If you use a debt management company such as PayPlan , it won’t buy the debt from your original creditors, nor give you money to pay off your debts.

Are debt management plans legally binding?

No. A Debt Management Plan is a debt solution to help you manage your existing credit in a more manageable way.

It is not a consolidation loan, you’ll still owe the money to the companies you originally borrowed from, but in a DMP you’ll make a more affordable payment that we’ll distribute fairly between them.

Can I enter into a Debt Management Plan (DMP) if I already have a CCJ?

Yes. When we’re setting up your DMP, we’ll make sure to prioritise a payment to the company who issued the CCJ to make sure you’re keeping up with the agreement.

I live in Scotland. Am I able to take out a DMP?

If you’re a Scottish resident, you can take out a DMP. When you contact PayPlan to discuss your options, we’ll also make sure that we consider any other solutions only available for Scottish residents such as a Debt Arrangement Scheme.

SETTING UP A DMP

How much does it cost to set up a DMP?

Debt Management Plans provided by PayPlan are free – there are no monthly costs or set-up fees.

Some providers do charge fees for setting up and managing a plan, so it’s important to make sure that you understand these before starting your DMP.

How are DMP payments worked out?

The amount you pay into your Debt Management Plan each month is worked out from your budget and affordability.

We’ll review your income and expenditure with you to understand how much money you have coming in and where it goes. To figure out how much your payment will be, you simply need to subtract everything you pay for, excluding the amount you pay towards your unsecured debts, from your income.

Your budget will include all of your priority debts and household costs. Secured debts and priority debts aren’t included in your plan, you’ll need to keep up with payments to these.

The leftover amount is what you’ll pay as one affordable monthly payment to the companies you owe money to instead of individual payments. We’ll distribute it fairly between the companies you owe money to.

How can I make my DMP payments?

The quickest and most convenient way to stay on track in your plan is to pay your plan with a monthly Direct Debit. You can also make payments by standing order, debit card or bank transfer.

How long will my DMP last?

The length of your DMP depends on how much you owe, can afford to repay each month and if the companies you owe money to agree to freeze interest and charges.

The term of your DMP might change as you progress through your plan. For example, if your circumstances change and you can afford to pay more, your DMP will reduce in length. Or, if your circumstances worsen and you can only afford lower payments, it will take you longer to complete your plan.

HELP DURING YOUR DMP

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

Normally the companies you owe money to will agree to freeze any interest and charges on your accounts while you’re in a DMP.. However, it’s important to know that this isn’t guaranteed, and they might not agree to. We’ll let you know if any of the companies you owe money to don’t agree to it.

LIFE WITH A DMP

How much will each of my creditors receive?

We’ll split the money you pay into your plan fairly between the companies you owe money to. This means that after any priority payments have been made, they’ll receive a percentage of your payment based on how much you owe. So, the companies you owe the most to will receive a larger share than those who you owe less to.

Will I have to live on a tight budget during my DMP?

Before you start your plan, we’ll take the time to help you create a budget and understand how much money you’ve got coming in and going out.

Once we’ve done this, it should leave a realistic and affordable amount for you to repay to the companies you owe money to each month.

You might feel a little stretched when you stop using credit and start living to a budget. Once you’ve adjusted to your budget, it should feel easier each month as you’ll only be making one affordable reduced payment instead of individual payments to each of the companies you owe money to.

Will I have to tell my partner about my DMP?

No, your DMP is completely confidential. We won’t ever force you to tell your partner that you’ve started a plan, and we won’t share any information unless you’ve given us explicit permission to do so.

DMPs are informal arrangements, so there won’t be a public record of you starting a DMP for anyone such as a partner or spouse to find. If you have a joint debt, both you and your partner are liable for the payment and balance. Your partner may become aware of your plan if a creditor notes that your account is included in a debt solution. It’s likely that they will be contacted about missed payments.

If an employer does a credit check, they may see markers, notes or defaults on your credit file.

YOUR CREDIT FILE

Does a DMP affect my credit rating?

Your credit score may have already been impacted if you’ve missed or made payments less than the contractual amount. In a DMP, you’ll be making reduced payments which will have an impact on your credit score. Any markers, notices or defaults applied to your accounts will show for six years.

How long does a DMP stay on my credit file?

Any markers, notices or defaults that are applied to your credit file will show on there for six years.

Can I continue to use credit while I have a DMP?

It can be considered fraudulent to take out credit that you know can’t be repaid, and it would be irresponsible for PayPlan to support you taking out further credit.

The Debt Management Plan that PayPlan arranges for you will ensure you have enough money to live on , so you shouldn’t need to take out any more credit. There are some exceptions, such as insurance and mobile phone contracts. For further advice on these, visit our page How does a DMP impact your credit rating?

We understand that things can change while you’re in a plan and that you may have unexpected costs. We’d always recommend that you don’t take out any further credit while you’re in a plan as it will make it harder for you to manage your budget and payments.

We’re always here to help, so if you’re thinking about taking out another line of credit, get in touch. There are lots of ways we can help to make things more manageable.

If you do take out further credit while you’re in a DMP, it’s likely that the interest and charges will be higher and the companies already included in your plan might not agree to continue to freeze interest and charges.

MOVING FROM OTHER DMP PROVIDERS

Can I move an existing DMP to PayPlan?

Yes you can – to find out more visit our page Moving an existing DMP to PayPlan.

My DMP company is closing. What can I do?

Dont’ worry, it’s possible to simply move your DMP to PayPlan. For more information on this, visit our page Moving an existing DMP to PayPlan.

DEALING WITH CREDITORS

Who informs the companies I owe money to about my DMP?

We’ll speak to the companies you owe money to and let them know that you’ve started a DMP. We’ll explain the situation to them, share your budget and make a repayment offer to them. We’ll update them every year or whenever anything changes to let them know of any changes and to share your progress.

If you have a significant change, such as a change in address or name, you’ll need to let them know of this so they can update their records.

Will the companies I owe money to agree to my DMP payments?

As a DMP is an informal arrangement, your creditors can still contact you directly, however this normally reduces throughout your plan.

You’ll still receive any automated letters or emails, and there are a few things such as Annual Statements or Defaults that they have to send you.

We’ll speak to all of the companies you owe money to that are included in your plan, so if you’ve had any contact from them that worries you let us know and we can help.

How will I know the companies I owe money to are being paid through my DMP?

You can manage your debt solution on PayPlan Plus. On here, you’ll be able to see the exact details of any payments we’ve received from you and made to the companies you owe money to on your behalf.

The companies you owe money to might contact you to say that they haven’t received a payment. This could be an error on their system, or it could be taking some time for their system to update since starting your plan. However, some may be asking for you to pay an additional payment outside of your plan. If they contact you to say your payment has not been made, simply contact us and we’ll speak with them and investigate it for you.

Can the companies I owe money to still issue me with a County Court Judgment (CCJ)?

Debt Management Plans are not legally binding, so the companies you owe money to can choose to take action against you to recover what you owe. In our experience, this is unlikely to happen if you keep up the monthly payments in your DMP.

If  one of the companies you owe money to applies to the court for a CCJ, then we’ll continue to support and advise you about how to manage this or explore other solutions that might suit you better.

Will I get a default notice with a DMP?

Your credit score may have already been impacted if you’ve missed or made payments less than the contractual amount. In a DMP, you’ll be making reduced payments which will have an impact on your credit score. Some of the companies you owe money to may send you a Default Notice which cancels the original agreement you held with them. Any markers, notices or defaults applied to your accounts will show for six years.

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