Dmp

lauren123

How do these work and who can do it? X

BeautyandtheBeast_3

bumping as you slipped off the main page xx

Tixy

Hi Lauren

A debt management plan is used where you cannot meet your minimum payments for your unsecured debts (after you have paid priority costs and basic household expenditure). Basically you work out the total amount you can afford to pay each month and this is divided equally between all your unsecured creditors - (split based on the balances you owe them all). This does mean your accounts will almost certainly be defaulted and so does have a big impact on your credit file. However for some its the only option (other than insolvency).

The payment plan is set to treat all creditors equally as this way they are most likely to agree to it. Usually whoever is organising the dmp asks the creditors to freeze interest & charges (there is no obligation for them to do this but often many of them do). You also agree not to take on any more credit/borrowing for the duration of the DMP.

A DMP is an informal agreement so if your income or circumstances change you can star paying more or less.

DMPs can be self-managed but usually people get a third party to organise them, that way you pay one monthly figure to the organiser and they pay each creditor for you.

You can use a free DMP organisation (this is the recommended option) - using these people - http://forums.moneysavingexpert.com/showthread.html?t=2077631.

There are also commercial organisations who you can use but these will take a percentage of your monthly figure as there fee so your creditors get less and it takes you longer to pay off your debts. Some also charge fees upfront. Needless to say these are not recommended on here.

Hope this clears things up - any more questions do ask.

lauren123

Thats great thanks! At the Mo..Im JUST meeting minimum payments so not something i'll be doing at the moment just seen a lot of people talking about them on here and is useful to know. :beer: x

Tixy

Good that you can meet your minimum payments, if things change and you can't, or if you are having to keep increasing your debts to make ends meet then thats the time to consider one.

If you are getting really close to the limit of being able to meet payments then complete the statement of affairs calculator. It will show either a shortfall or surplus at the bottom, if you have a shortfall then you may want to consider a DMP.

Good luck.