DMP's - Myths and Truths

saltnvinegar

Hi All

Being on a self administered DMP and reading this board and others for a long time I see a lot of posters who starting out on their DFW journey get confused about what Debt Management Plans actually are, how they work, what they mean to creditors etc etc.

I couldn't find a definitive list anywhere (with the exception of some FAQ's on the CCCS website) so thought I would start a thread where anyone contemplating a DMP could get clear on the common myths and misunderstanding that surround them.

I'll start off and anyone please feel free to add to them! Of course this is only my understanding also so please feel free to correct me!

BTW I am not trying to put a downer on DMPs, personally I think it has been the best thing I could have done to manage my debt, but just want people to be aware of what it means.

Best
SnV

MYTH: A DMP is a legally binding contract between creditor and debtor
TRUTH: A DMP although agreed by your creditors is not legally binding at all

MYTH: If I set up a DMP with a company my creditors have to accept it
TRUTH: Creditors are under no obligation to accept a DMP proposal

MYTH: Once on a DMP my creditors will stop calling me.
TRUTH: Once you are on a DMP it is more than likely that your creditors will stop calling. They are under no obligation to do so though (see next)

MYTH: Once on a DMP my creditors will not be able to continue collection activities nor take me to court
TRUTH: Creditors, if they wish, are still able to continue collection activities and can still take you to court. However being on a DMP gives you more leverage against them in terms of harrassment, being unreasonable etc.

MYTH: I have to pay a company to set up a DMP
TRUTH: Anyone can set up a DMP, you can even do it yourself if you wish. There are debt charities that also do this service for FREE. Personally I would never pay a company to do something you can do yourself or get just the same service for FREE!

MYTH: Creditors cannot default you or put anything bad on your credit file when they have agreed to a DMP
TRUTH: Creditors can, and most certainly will, default you should you enter into a DMP and they accept and this will be marked on your credit file

MYTH: Creditors cannot charge interest or add fees to an account subject to a DMP
TRUTH: Creditors are under no obligation to freeze interest or charges although many will if asked to do so

MYTH: The amount paid into a DMP cannot be changed
TRUTH: The whole point of a DMP is that you only pay what you can afford. If your circumstances change either in a positive or negative way you should review your DMP accordingly. This will of course mean your creditors will have to agree the new amount if it reduces. I don't think many creditors would complain if it increased!!

MYTH: I will not be able to get additional credit if on a DMP
TRUTH: It will be highly unlikely that you will be offered credit purely because of the defaults that will be likely put on your credit files. However you should be asking yourself why are you looking to extend your credit even further if you have had to set up a DMP in the first place

MYTH: If I enter into a DMP I will lose my house
TRUTH: Entering into a DMP will do no such thing. Only not paying your mortgage, defaulting on a CCJ etc will put your house at risk

MYTH: DMP's are for losers, failures, you should be ashamed.
TRUTH: DMP's are everyone who are in a particular debt situation and are a solution to that situation. Being on a DMP does not make you a bad person or a failure. Quite the opposite. It shows you are not burying your head in the sand and are looking to deal with your debt.

Deep_In_Debt

saltnvinegar wrote: »

Hi All

Being on a self administered DMP and reading this board and others for a long time I see a lot of posters who starting out on their DFW journey get confused about what Debt Management Plans actually are, how they work, what they mean to creditors etc etc.

I couldn't find a definitive list anywhere (with the exception of some FAQ's on the CCCS website) so thought I would start a thread where anyone contemplating a DMP could get clear on the common myths and misunderstanding that surround them.

I'll start off and anyone please feel free to add to them! Of course this is only my understanding also so please feel free to correct me!

BTW I am not trying to put a downer on DMPs, personally I think it has been the best thing I could have done to manage my debt, but just want people to be aware of what it means.

Best
SnV

MYTH: A DMP is a legally binding contract between creditor and debtor
TRUTH: A DMP although agreed by your creditors is not legally binding at all

MYTH: If I set up a DMP with a company my creditors have to accept it
TRUTH: Creditors are under no obligation to accept a DMP proposal

MYTH: Once on a DMP my creditors will stop calling me.
TRUTH: Once you are on a DMP it is more than likely that your creditors will stop calling. They are under no obligation to do so though (see next)

MYTH: Once on a DMP my creditors will not be able to continue collection activities nor take me to court
TRUTH: Creditors, if they wish, are still able to continue collection activities and can still take you to court. However being on a DMP gives you more leverage against them in terms of harrassment, being unreasonable etc.

MYTH: I have to pay a company to set up a DMP
TRUTH: Anyone can set up a DMP, you can even do it yourself if you wish. There are debt charities that also do this service for FREE. Personally I would never pay a company to do something you can do yourself or get just the same service for FREE!

MYTH: Creditors cannot default you or put anything bad on your credit file when they have agreed to a DMP
TRUTH: Creditors can, and most certainly will, default you should you enter into a DMP and they accept and this will be marked on your credit file

MYTH: Creditors cannot charge interest or add fees to an account subject to a DMP
TRUTH: Creditors are under no obligation to freeze interest or charges although many will if asked to do so

MYTH: The amount paid into a DMP cannot be changed
TRUTH: The whole point of a DMP is that you only pay what you can afford. If your circumstances change either in a positive or negative way you should review your DMP accordingly. This will of course mean your creditors will have to agree the new amount if it reduces. I don't think many creditors would complain if it increased!!

MYTH: I will not be able to get additional credit if on a DMP
TRUTH: It will be highly unlikely that you will be offered credit purely because of the defaults that will be likely put on your credit files. However you should be asking yourself why are you looking to extend your credit even further if you have had to set up a DMP in the first place

MYTH: If I enter into a DMP I will lose my house
TRUTH: Entering into a DMP will do no such thing. Only not paying your mortgage, defaulting on a CCJ etc will put your house at risk

MYTH: DMP's are for losers, failures, you should be ashamed.
TRUTH: DMP's are everyone who are in a particular debt situation and are a solution to that situation. Being on a DMP does not make you a bad person or a failure. Quite the opposite. It shows you are not burying your head in the sand and are looking to deal with your debt.

Although it seems more creditors are trying to take this route. I've read stories on here and other forums where some creditors have gone straight for a CO regardless of CCJ and been granted it. It can be fought though. Judges sometimes need to be reminded of the law.

Apart from that S&N, pretty good :beer: