Debt Management
Debt Management Plan (DMP) is an informal arrangement put together by a Debt Management Company, and presented to your Creditors on your behalf. Financial Planning Options Ltd work closely with your insolvency practioner and together we will negotiate and deal with Creditors, we will request Creditors to freeze or reduce interest payments. The Creditors will be paid monthly from the contributions you make to the DMP on a pro-rata basis, and you will be sent regular statements by the company and kept informed of any changes.
A Debt Management Plan could be the perfect solution if you have equity in your home but do not wish to – or are not able to – remortgage to clear your debts. Similarly, if you have tried the self help plan and just need a little extra support as you clear your debts and get life back on track.
A Debt Management Plan may be appropriate where you do not wish to enter into a formal arrangement with your creditors.
Advantages
- You pay one single reduced amount.
- The payments are based on what you can afford.
- The plan is flexible and it can be reviewed if your circumstances change.
Disadvantages
Creditors may not respond to this as much as a formal agreement, and consequently may continue to add interest and charges, therefore increasing your debt.- A Debt Management Plan cannot stop any creditor taking legal action against you.
- As you are not making contractual payments, it generally will take longer to clear your debt. However you will have a more manageable repayment plan allowing for better budgeting.