Few questions about Debt Management Plans

stevelatimer

Hi,

I am pretty sure I am going to go on a Debt Management Plan but have some questions.

I am currently only working as a part time contractor so simply can't afford to pay my debts and live. They aren't massive debts by any means (approx 8k) but I cannot keep up repayments at present and haven't been able to for a few months now. I have always had very well paying jobs but have been very unlucky recently so am now in a bit of bother.

Anyway. I believe I go on a debt management plan and they assess my income and debts and come up with a manageable amount. This seems ideal but I have a few questions

1) If I become unemployed or contract ends abruptly can I reduce the agreed amount?
2) Similarly, if I get a better paid job (which is looking fairly promising) can I up the amount or better still cancel the plan and go back to paying the companies normally? Not sure if I am tied into the plan or not.

Any advice would be brilliant.

Thanks for reading

dreamdreamer

You can definitely put the amounts up and down, in fact I believe you're obliged to tell the DMP company of any change in income so that they can do this. As to cancelling and going back to normal - you can cancel the plan and manage the creditors yourself, but I doubt you'd be able to go back to paying them "normally" as you're in formal repayment plans by that point, and some debts may well have been passed onto debt collection agencies so it won't be the original creditors (ie. the banks and credit card companies) that you're paying to.

I'm sure someone on a DMP will be along shortly with some more detailed info for you!

RedTulip

Hi

I was on a dmp for 4 years until I settled on a f&f last year. Every 6 months(ish) I would get a call from the dmp company asking for an update on my financial circumstanes and we would go through all my income and expenditures - they would occasionally ask for a payslip as confirmation of my earnings too.

The payment amount to the dmp is based on what money you have left over at the end of each month ie 1000 income per month, less 400 mortgage, 100 utilities, 150 shopping, 50 other leaves 300 left, this is what would be paid to the dmp and dished out to your creditors.

In my case as the years went on and I got better paid jobs, the payments were increased to the dmp and subsequently the creditors. I do know it works the other way also so if your income was to go down you could just contact them and reduce the payments as dreamdreamer said also.

I notice your post does not mention who you are looking at doing the dmp with. Not sure if you've looked into it at all, but do not go with a company that you have to pay for, use cccs or similar. Unfortunatly I did not know there were free dmp's (ignorance on my part) and I ended up paying a 'management fee' to the company on top of the payments to the creditors. That said I can not fault the dmp company I was with at all, just wish i'd looked into it more beforehand.

Hope that helps, and good luck x

Mrs_Arcanum

Try National Debtline They offer a completely free service and will advise on the best type of plan. They will then pass you on to the appropriate Debt Management company (CCCS in my case).

Whatever you do try not to be duped into paying.

Jinx

1) If I become unemployed or contract ends abruptly can I reduce the agreed amount? Yes you can, I've done my own DMP for 6 years and just write to creditors in advance and change my recurring online payment. Token 1 quid while unemployed (did contracts for 2 years) and proper amount while employed.


2) Similarly, if I get a better paid job (which is looking fairly promising) can I up the amount or better still cancel the plan and go back to paying the companies normally? Not sure if I am tied into the plan or not. You can go back to paying normally; however if you enter a DMP (managing yourself or using Payplan or CCCS) you WILL get defaults and trash your credit rating so be sure that you want to go down this route before you do it. If you can afford the min payments and value your credit rating it may be worth tightening your belt to make the payments.

HTH

MrsTinks

dreamdreamer wrote: »

I doubt you'd be able to go back to paying them "normally" as you're in formal repayment plans by that point, and some debts may well have been passed onto debt collection agencies so it won't be the original creditors (ie. the banks and credit card companies) that you're paying to.

Actually the whole point of DMPs is that it's NOT a formal repayment plan like an IVA Minor point in this case but worth getting right
Creditors don't have to agree to DMPs (or IVAs unless there is a majority of creditors who HAVE agreed)
However unless you could clear the arrears and the debt was still with the original creditor then no - it's very unlikely that you would return to your "normal" repayments. Also if you haven't already defaulted on your debts be aware that a DMP will default your payment status and this will remain on your credit file for 6 years...
Until you repay your debts it's likely that your file will also be marked as being in a repayment arrangement...