If your debts are adding up, it may be time to consider arranging a debt management plan.
These agreements serve as safety ropes, helping pull you out of danger before the debt becomes unmanageable. Negotiating these types of plans with creditors can be daunting and complicated. If an informal debt management plan is something you may like to consider, the Bennett Jones team will be happy to provide you with information to help you choose a regulated company or charity that can administer the plan for you. Get in touch today and take advantage of our insolvency knowledge, for free, by calling 0161 960 0054 or submitting your details via our online enquiry form.
Bennett Jones has helped thousands of people solve their debt problems. We understand how stressful and difficult life is when you can’t pay your debts and your bills.
You can trust Bennett Jones to help you if you are struggling to pay your debts. We specialise in Individual Voluntary Arrangements – a legal solution that allows for unaffordable debts to be written off. With an IVA from our team, you will make affordable repayments to your creditors over a fixed period, with the remaining debt written off at the end.
What’s the difference between an IVA and a DMP?
IVA stands for Individual Voluntary Arrangement, and DMP stands for Debt Management Plan. DMPs are not legally binding. This means that your creditors can still take action against you should you default on your revised payment plan.
Is a DMP right for you?
A DMP may be a good option if the following apply to you:
- You can afford the monthly repayments on your priority debts (such as mortgage, rent and council tax) and your living costs, but are struggling to keep up with your credit cards and loans.
- You’d like someone to deal with your creditors for you
- Making one set monthly payment will help you to budget.
Joint debts and DMPs
If you have a debt in joint names with someone else, this can be included in your DMP. However, your creditors may still chase the other person for all of the debt. This is because whenever you take out a credit agreement, such as a loan or bank account, with another person, you’re both liable for the full amount of the debt. If both you and your partner are struggling with debts, you might want to consider setting up a joint DMP where you’d both be equally responsible for the repayment plan. It doesn’t matter if you have different levels of income or debts. You can also include debts that are only in one name in a joint DMP.
Will a DMP show up on your credit file?
Your DMP may show up on your credit reference file. Some creditors may ask for a note to be put on your file to say that you have a DMP. This would reduce your chances of getting credit if you applied for it while on your DMP, as it would show you’ve had trouble keeping up with repayments. However, if you kept up with your DMP repayments, the DMP would look better on your credit reference file than unpaid debts or debts that you were only making infrequent payments towards. The note may also stay on your file for a time after the DMP has ended, so you may struggle to get credit for some time afterwards.
If you miss payments this is also recorded on your credit reference file. Even if you’re in a DMP, your creditors may still record that you’ve missed payments, as you’ll be paying less than you agreed to when you took out the original credit agreement. This will mean you could find it harder to get credit while you’re making reduced payments and for some time afterwards.