A Debt Management Plan is where you have an agreement between yourself and your creditors (the organisations you owe money to), to pay back all of your debts.
You may do this either by: –
- Setting up a DMP through either Payplan or StepChange for free.
- Setting up a DMP with a fee charging company who is licensed.
- Setting up a DMP yourself. This is what I do but be warned, it can be demanding if you owe money to a lot of creditors.
- Whilst you are in a DMP, you should find your repayments are more affordable.
- Other solutions may be more suitable for you. Get advice before committing to anything.
- A DMP can only be used for debts which are not secured. For example you couldn’t use a DMP on a debt secured against your property
- You make a single monthly payment unless you do it yourself.
- Interest and Charges might not be frozen.
- Your creditors may continue to contact you.
Managing my own DMP works for me overall, and the types of debt I have. This is despite my complaints of how much time it takes me.
However, before you do anything, I would recommend talking to either StepChange or Payplan to see what your best option is for getting out of debt.
Also if you are currently paying for a Debt Management Plan, remember there are free alternatives out there.