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FAQs

DMP (Debt Management Plan)

Our FAQs answer the most common questions about how DMPs work so you can decide with confidence whether this solution is right for you.

Why do I have to change my bank account?
If you have a current account with a company you owe money to, you will be required to open a new bank account. This is not only the case with a DMP but you should change your bank account if you are going to make reduced payments to a company that you also bank with. Banks have the “Right to Offset” so any money in your current account could be used to pay another debt with the bank.
Will I have to live on a tight budget during my Debt Management Plan (DMP)?

To enter into and maintain a successful Debt Management Plan you will need to live within a budget, however this is discussed with you openly. PayPlan are required to submit your income and expenditure details to your creditors.

Remember that when we’re negotiating your DMP, it is in your interest if we can show your creditors you are prepared to stick to a realistic budget to help repay your debts.

Will I have to tell my partner about the Debt Management Plan (DMP)?

We offer an absolutely confidential service from start to finish, so PayPlan will never force you to tell your partner about your debt situation, although support is available if you wish to tell them.

A DMP doesn’t usually affect your partner’s credit rating, but if you have a financial association, such as shared debts or guarantor debts, then it could do.

Whenever we contact a client we take great care to avoid divulging the nature of our call to anyone but the client.

Which debts are included in a Debt Management Plan (DMP)?

A DMP will only help you make reduced payments to your unsecured creditors, therefore the debts that can be included are:

  • Personal loans (loans taken to purchase cars are fine but Hire Purchase (HP) agreements cannot be included as they are secured against the item being purchased)
  • Credit cards
  • Store cards
  • Catalogues
  • Overdrafts

Secured debts can’t be included in DMPs because any payments on secured debts that aren’t met in full, can lead to the goods being repossessed. This website provides details on house repossession and car repossession, which are all consequences of not maintaining mortgage or hire purchase payments.

Is my home at risk if I enter into a Debt Management Plan (DMP)?
A Debt Management Plan is an informal arrangement which is not legally binding and although having a DMP could reduce the chance that the property would be at risk, there is a chance a creditor could take legal action such as securing a charging order on the property. This would secure the debt and a creditor could force the sale of the property at any point during a debt management.
What happens to my secured debt during a Debt Management Plan (DMP)?

Your secured debts (i.e. mortgage and car hire purchase) can’t be included in a Debt Management Plan; only unsecured debts can be included in a DMP. If you are unable to make the contractual payments to your secured debts you are at risk of losing the item to which the loan is secured on (e.g. the house if you default on the mortgage or the car if you default on the HP agreement).

PayPlan will ensure you include your secured debt repayments in your income and expenditure budget right from the start. This should mean you never get into arrears with your secured debts, and PayPlan strive to help you budget sensibly when you are in a DMP. This site offers further information on Mortgage Arrears, Car Repossession, and House Repossession.

Will interest and charges be frozen during my Debt Management Plan (DMP)?

No debt management company (even PayPlan) can guarantee that creditors will freeze interest and charges during your Debt Management Plan (DMP), and you should be wary of those who say they can.

We feel your best chance of achieving such a freeze is by presenting a realistic income and expenditure report to your creditors, as we would on your behalf before you begin a DMP with PayPlan.

Can I continue to use credit during my Debt Management Plan (DMP)?
As responsible debt advisers, we ask clients not to obtain further credit whilst in a Debt Management Plan. It can be considered fraudulent to take out credit that you know can’t be repaid. The Debt Management Plan that you discuss with PayPlan will ensure you have enough money to live on, so you shouldn’t need to take out any more credit during your DMP. There are of course exceptions; for example you might have a company credit card where you are not liable for the repayments, but you should still declare these to avoid any problems.
What support do I get during my Debt Management plan (DMP)?

At PayPlan we pride ourselves on giving excellent support to all our clients. Throughout your PayPlan Debt Management Plan arrangement, we will continue to support you so if you have any questions or concerns, do not hesitate to get in touch. If your financial situation changes, call us, and we will go through your circumstances and, see what options are available. 

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

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

CCJs don’t prevent you from entering into a Debt Management Plan.

PayPlan will help you make the payments to creditors who have issued you with a CCJ. You will be required to provide details of your CCJ during the financial assessment we undertake as a normal part of your Debt Management Plan, and CCJ payments will be given priority when PayPlan distribute your payments monthly.