Published in on Thursday, January 22 2009 by Ideal Debt Solutions
There are various options available to you if you need a debt management plan - or ‘DMP’.
A DMP is an effective way of paying creditors for people who have found themselves in too much debt. A counsellor calculates the amount you can afford to pay after considering your essential ongoing debts and bills like mortgage payments, utilities, council tax and food and deposits any money left over with a debt management company as a single monthly payment. The company negotiates one affordable monthly amount to your creditors who are paid on a monthly basis.
Your payments are based on income, but none of your debts are written off. The good news is that interest payments are stopped. A DMP is flexible in that if your circumstances change then you may be able to amend your payment to suit your ability to pay.
So who do you use?
Well, there are charities that don’t charge commission or fees for arranging and managing the plan. But in this situation, the charities don’t try to negotiate write-offs or early settlement of your debts as they are funded by your creditors. The same is true of some private companies - whilst others charge very high up-front and monthly fees.
If you choose to pay for the plan - somewhere around 15% is an average percentage to the company running the plan. The advantage here is that the company isn’t funded by your creditors, so has more of a vested interest in negotiating a write-off or early settlement on your behalf.
Overall, a debt management plan can be a workable solution if you aren’t in debt too deeply, but always seek advice from professional financial experts with many years’ experience in debt management.