Jasmine Birtles
Your money-making expert. Financial journalist, TV and radio personality.
Debt Management Plans – The Different Types and What is Best For Your Needs
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Struggling with debt can be overwhelming, however, there’s help available. One option to consider is a Debt Management Plan (DMP). This is essentially an agreement between you and your creditors, making your financial situation more manageable.
Is a DMP Right for Me?
With a DMP, you’re able to:
- Make one affordable monthly payment
- Potentially stop interest and charges
- Cancel anytime
A DMP is designed to restructure your repayments into more manageable amounts, allowing you to gradually pay off your debt without the constant financial pressure.
You may want to consider this option if your debts are causing you stress, you’re struggling to pay your bills on time, or you’re frequently using overdrafts and credit cards to cover expenses.
Am I Eligible for a DMP?
To be eligible for a DMP, you typically need to meet the following criteria:
- Be a UK resident
- A minimum of £100 in disposable income each month
- Two or more unsecured debts
- A total of £2,000 or more in unsecured debt
If you’re considering this as an option, you may want to speak to a regulated debt advice firm.
The advisors at MoneyPlus Advice can review your financial situation, create a plan that suits your needs, and handle negotiations with creditors on your behalf, making your debt repayment process smoother.
Duration
The duration of your DMP can vary based on several factors, such as your monthly repayment amount and any changes in your financial situation. If your financial circumstances improve, MoneyPlus can help you adjust your repayment plan, potentially allowing you to pay your debt off sooner.
Alternatives to a DMP
If you feel a DMP isn’t right for you, there are other options you can explore.
An Individual Voluntary Arrangement (IVA) is a court-approved agreement which is designed to help you manage your debts. It allows you to pay off what you owe over a set period which is usually between five to six years. After this time, any remaining debt is written off.
If you have debts up to £30,000 (£20,000 for those in Northern Ireland), a Debt Relief Order (DRO) could relieve you from your repayments for 12 months. After this time, if you’re still unable to repay, your debts could be written off.
How to Apply for a DMP
To apply for a DMP, get in touch with MoneyPlus. They’ll assess your financial situation, including your current debts, and provide advice on the best solution for you. If a DMP is recommended, they’ll assist you through the application process, from completing paperwork to negotiating with creditors on your behalf.
Which Debts does a DMP Cover?
- Buy now, pay later
- Overdrafts
- Credit cards
- Store cards
- Payday loans
- Bank loans
Which Debts aren’t Covered in a DMP?
While a DMP can assist with many types of debt, some types of debt that aren’t included are:
- Council tax
- Income tax
- Court fines
- National insurance
- TV licence
- Utility bills
- Priority bills arrears
Living with a DMP
Once your DMP is in place, you should find it easier to manage your finances. While creditors may still attempt to contact you, you can refer them to MoneyPlus, and they’ll be able to handle the rest.
Impact on Mortgages and Renting
While a DMP may make it harder to get a mortgage or remortgage, it shouldn’t affect your current tenancy if rent payments are up to date.
Protection Against Bailiffs
While a DMP can’t guarantee protection against bailiffs, having a repayment plan in place can help keep your assets safe and reduce the risk of legal action.
Paying your DMP off Early
If your financial situation improves, allowing you to pay your DMP earlier than expected, the MoneyPlus Settlements Team can assist with this process, meaning you could settle your debts more quickly.
Why Choose MoneyPlus Advice?
MoneyPlus Advice has a rating of 4.9 out of 5 stars on Reviews.io. They have a strong track record of helping people successfully manage and overcome their debts by offering debt solution options including Debt Management Plans, Individual Voluntary Arrangements and Debt Relief Orders.
So, if you’re struggling with debt, reaching out to MoneyPlus could help you get on the path to financial stability.
Disclaimer: MoneyMagpie is not a licensed financial advisor and therefore information found here including opinions, commentary, suggestions or strategies are for informational, entertainment or educational purposes only. This should not be considered as financial advice. Anyone thinking of investing should conduct their own due diligence.
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