What is a Debt Management Plan?
It can be so difficult to cope with the stresses of everyday life when your debts seem to be constantly mounting. You never seem to have enough money coming in to keep all your creditors happy, and the longer it goes on the more worrying it can all become. Thankfully, there are ways to help you get out of the spiral.
A Debt Management Plan (DMP), could be perfect for your needs. It enables you to pay one single affordable payment each month, and this money is then distributed among your creditors. Once it’s up and running, you’ll be spending what you can afford and no more, leaving you to take back control of your life.
Not all debts can be included in a DMP, but non-priority ones can. They include the likes of:
- Credit and store card balances
- Bank overdrafts
- Personal loans
- Payday loans
- Catalogue debts
Your creditors don’t have to agree to such an arrangement, but those that do will then be content to accept a regular payment from the start of the DMP. It should be pointed out that creditors may still contact you during the agreement period, which isn’t the case with some other debt solutions, such as a Trust Deed.
Working out what you can and can’t afford
Once you agree to a DMP, the first task is to draw up a list of your income and expenditure, after which an affordable monthly payment is then calculated. This will leave you with reasonable living expenses from then on. The final figure is usually reviewed on an annual basis after that.
Creditors often freeze interest payments and further changes, but they are under no obligation to do so. The DMP will have an affect on your credit rating, as you might expect, but it represents a viable alternative to bankruptcy or sequestration. As always, you need to seek advice and guidance before signing on any dotted line.
BlueSky Finance have been helping people just like you all over the UK. We understand what you’ve been through and how difficult it can be to start looking for outside assistance. Our friendly and experienced team will be able to listen to your story, offer all the sympathy you need as well as practical guidance on the best approach from then on. We hope to hear from you soon on 0141 488 2212.