What is a Debt Management Plan?
A DMP is a debt solution that helps people to take back control of their finances. In a DMP, you’ll make one affordable monthly payment that is split fairly between the companies you owe money to.
Learn more about how a Debt Management Plan works.
See if a DMP is right for me
How much does a DMP cost?
With PayPlan, a DMP is completely free. You won’t pay any set-up fees or charges. This means that everything you pay into your plan will be sent to the companies you owe money to so that you can become debt-free faster.
Some debt management companies charge fees for setting up and managing DMPs. Please be aware that if you are considering a plan with a fee-charging company, it will take you longer to complete your plan.
How will a solution that isn’t legally binding affect me?
Debt solutions that aren’t legally binding are sometimes called “informal” debt solutions.
Solutions that aren’t legally binding, like DMPs, are sometimes considered more flexible. They’re an agreement between you and the companies you owe money to, so you can cancel your plan at any time without facing any legal consequences.
However, this also means that the companies you owe money to aren’t legally bound by the agreement’s terms.
In a DMP, we’ll ask them to freeze interest and charges, reduce the amount of contact they send you and not take any legal action. Normally, they agree, and you’ll start to notice this a few months into your plan – but they don’t have to do this.
What are legally binding solutions, and how do they work?
Legally binding solutions are considered “formal” debt solutions, these are usually forms of insolvency, such as Individual Voluntary Arrangements (IVAs), Debt Relief Orders (DROs) or Bankruptcy.
If you enter a legally binding agreement with your creditors, both you and the companies you owe money to are bound to the terms of the agreement.
There are some great benefits to this, such as a guarantee that your interest and charges will be frozen, no legal action, and no longer being chased for payments.
However, you’ll need to stick to the terms, too, so it’s important to understand that there can be serious consequences if you break the terms of the agreement.
Thinking about a DMP but unsure what’s right for you?
Get free debt advice online or call 0800 316 1833 to speak to one of our experts. We’ll explain the solutions available, check what you may be eligible for and help you choose the option that best fits your situation.
See if a DMP is right for me