Can I apply for a DMP?
There are debt management companies that can set up a debt management plan for you, or you can arrange a plan with your creditors yourself. If you decide to go with a company, they contact your creditors and all you need to do is make regular payments to the company who then share the money out between your creditors.
How to apply for a DMP
It’s important to find a debt management company that is authorised and regulated by the Financial Conduct Authority (FCA) if you don’t wish to arrange a DMP yourself.
They’ll ask about your financial situation, who you owe money to and how much. Based on that information, the company will determine how much you can realistically afford to pay each month.
The company then contacts your creditors to ask them to agree to the DMP. They’ll make each creditor an offer to pay a set amount each month, which will be taken from the monthly amount you have agreed to pay.
What happens after a DMP is arranged?
If your creditors agree to amounts proposed, you pay your monthly agreed amount to the debt management company and they’ll share this out to each of your creditors on your behalf.
Important points to keep in mind:
- Your DMP is an informal agreement – it’s not binding and your creditors can change their mind at any time.
- If you are self employed the adverse affect on your credit rating of a DMP may consequently impact on your business.
- You can’t include certain debts in a DMP such as loans from family or friends.
A full list can be seen here
Want to know more about your options?
A debt management plan isn’t for suitable for everyone. At moneyextra.com you won’t find debt advice, but here are some of the organisations that can help identify the best debt solution for you, and help you apply. If you need help with debt, you can speak to the Money Advice Service or the Citizens Advice Bureau for free.