Debt Management Plans - 5 things you need to know

Article Written By: Paddy Byrne

There are many good Debt Management Companies offering their services who will negotiate with your creditors and who have a track record of getting offers accepted. However, creditors do not have to accept reduced payments or freeze interest and charges and there is no guarantee that any existing or threatened proceeding will be suspended or withdrawn and any collection costs incurred by your creditors will normally be added to your debt.

Do you have to be employed to enter a DMP? No, but you do need a source of income that is more than you require for living expenses. However, people who have recently become unemployed and who are actively seeking employment can consider offering their creditors a short term DMP, particularly when they have good prospects of obtaining employment with a reasonable level of disposable income.

Because a DMP is flexible and informal, it is not as rigid as other processes. Your DMP Company will usually have assigned a contact or liaison officer with specific responsibility for your DMP. Know who your contact person is and keep them fully aware of your circumstances at all times and particularly in relation to any direct correspondence or contact from your creditors or any changes to your income and expenditure. Your DMP Company should contact your creditors and communicate any issues that arise from your changed circumstances and propose solutions that satisfy them and that suit you.

How long will your DMP last? This depends on your personal circumstances. However, the Debt Management Company you engage should be able to estimate the length of the arrangement, once it has received all your personal information. Since all of your debts are to be paid off in full, the term of the DMP could be quite long.

Is any legislation to regulate DMPs planned? The Ministry of Justice in the UK has issued a consultation document on the future of DMPs. Three options for regulation are being suggested:

-Marginally enhanced regulation by the OFT

-Industry self regulation with voluntary codes of practice

-A new statutory solution - the Statutory DMP

About the Author

Debt Management can be a great option if you are suffering a serious debt issue. We can offer advice and also Debt Management Plans

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