Debt Management Plan

Debt Management Plan

If you are struggling with multiple UK debts and have the responsibility to pay multiple bills monthly, then a debt management plan (DMP) can be the best-suited solution for you.  At such a situation, one needs to make proper planning so that he/she could afford to pay off the debt in proper monthly installments. Citizens Debt Help provides free debt advice to help the citizens plan out their DMP and monthly affordable payments with a lower rate of interests.

Our highly experienced team of financial advisor working for the team of national debt line will analyse multiple factors and may even help you in figuring cut costs. They also create a budget accordingly for monthly repayment. We even help you plan the whole repayment procedure under the DMP with zero consultation fees. Often DMP is a preferred way for dealing with IVA debt.

FAQ

Often a debt management plan is mistaken as a loan to repay the direct debts and reduce unsecured debts. But a debt management plan is basically a well-designed programme to deal with the UK National debt. Under this programme, debt management companies like Citizen Debt Help work in close association with the creditors, to whom you owe money and make the repayment plan. The aim of the DMP is to reduce the amount of monthly repayment, reduce the rate of interest and waive off additional charges and penalties if possible. The tenure of repayment usually varies from 3 to 5 years.

Thus, a debt management plan is basically a part of a debt consolidation plan that is implemented to deal with UK debt. Through DMP, an individual gets maximum control over his financial situation.  The best part is that it covers unsecured debts like medical bills, student loans etc. The financial advisor analyses the household income, expenses and other financial commitments to decide the monthly repayment amount.

The monthly payment amount is planned only as per the affordability of the debtor. When you avail the debt advice from CDH, our financial advisor will convince the creditor and help the debtor and the creditor get into an agreement. The debtors agree to pay the monthly repayment amount on a certain date and the creditor agrees to it. If you avail our free citizen debt help UK, our team will help you figure out whether DMP is the best-suited plan for you or not.

Thus, a DMP is designed to manage all your UK national debts and other unsecured debts and ensure monthly repayment at an affordable rate to clear them at the earliest.

DMP provides you with the opportunity to deposit money with the respective credit counselling organization, who deals with your UK debt. The financial advisor then accordingly pay your unsecured debts from that deposit as per the repayment schedule. But before you sign up, please figure out if there is any other credit involvement is there during the process.

Although, DMP may not be the best option for all as it is not a credit counselling. Thus, before getting enrolled under this plan, it is always better to get in touch with a certified advisor. You can either call at the national debt line or contact online the team of free citizen debt help UK. 

Types of Debt Management Plans:-

The debt management plan has been designed to deal with various non-priority UK debts. Based on the kind of debts an individual will be repaying through DMP, the plan is classified on various types. Types of DMP include:

  1. Overdrafts
  2. Personal loans including bank loans, building society loans
  3. The money you owe to family and friends
  4. Credit cards, payday loans and store cards
  5. In-store credit cards, catalogue and home credit
  6. Student loans
  7. Utility bills through arrears
  8. Bills of rental properties
  9. Various secured debts like those of mortgages
  10. Car finance loan or other high purchase agreement
  11. Court fines

Opting for debt management plans as a way to deal with UK debts is always a good option. But before you sign up for that, you should consult the financial advisor to figure out what can be the probable advantages and risk factors involved.

The advantages of the DMP includes the following:

1. One monthly payment:

Debt management plan ensures you the liberty to make only one monthly payment for all your non-priority UK national debts. Irrespective of the number of debts you owe to multiple creditors, you don’t have to bother about their payment at different point of the month. You will make the payment to the counselling agency and they will take care of the rest.

The team working for the debt advice for the DMP, will coordinate with all the other creditors and pay the amount of repayment on your behalf. Thus, you don’t have to keep track of the repayment date for various debts. Since all your repayments will be channelled into one, there will be less or no chance of fine being imposed for late payment. You will just be liable for making the monthly payment to the credit counselling agency. Unlike, debt consolidation loan, DMP has lesser financial stress and danger involved. 

 2. Reduced interest rates

The financial advisor of the debt counselling organization has the responsibility to coordinate with all your coordinators and negotiate the rate of interests. Be it any sort of UK national debt or other non-priority debts, high rate of interests will always result in high repayment amount. Thus, lowering down the rate of interest for repayment will reduce the amount of repayment by default. This will reduce the amount of monthly repayment.

Once you sign up for the DMP for direct debt or the IVA debt, it is believed that you are willing to repay the whole amount of debt at your best possible ways. Thus, often it gets easier to convince the creditors to lower the interest rate and even waive off certain additional charges. Once you have made the payment for three consecutive months, the financial counselor may even convince the creditor to mark your past-due account as the ‘current’ one.

3. Faster debt repayment

Once an individual sign up for the debt management plan to repay UK debts, the team of debt advice will plan the repayment procedure. The aim is to ensure that you can be debt-free within the best possible time frame.  Usually, the tenure of repayment varies from a period of three years to five years. If the interest rate is reduced, it becomes easier to repay the debt faster as the individual saves money more. 

Based on your principal amount and the number of creditors involved, the counsellors will calculate your monthly repayment amount and best possible time needed to repay your whole amount of debt.

4. Boost in credit score

Although DMP doesn’t ensure that there will be an absolute increase in the credit score, there is always a fair possibility. Although, the impact of DMP on the financial status of an individual usually varies from person to person. As per various trends and records, usually, the individuals who sign up for DMP have often witnessed a certain rise in their credit score after a certain point of time. It mostly happens because DMP makes the repayment process more consistent and also lowers the debt. These two factors in turn indirectly help you increase the credit score. More specifically, DMP has no provision that led to the opening of new lines of credit.

5. Get rid of collection calls

While you owe money to the creditors, one of the most annoying parts is getting the calls from the creditors for the debt collection. Be it any sort of national debts or any other UK debts, collection call is always a headache for any debtor. But once you decide to repay your creditors through the debt management plans (DMP), you will be relieved from such calls and messages. Even if the creditors get in touch with you for any sort of payment related discussion, you can ask them to contact your financial counsellor. In fact, after 90 days from the day, your DMP will start, your creditors are not supposed to contact you directly. You may just have to deal with them only during the period, the official process of your proposal is going on.

6. Get rid of debts

Debt management plan ensures that all your non-priority UK debts are repaid within a tenure of 30-60 months. Although, it also has the provision through which the absolute amount you owe will be credited to your account. DMP includes designing your repayment procedure while considering your income and other expenses. Thus, you will get a debt-free life while maintaining your other financial commitments within the best possible time frame.

Although, a debt management plan can be one of the best options to deal with all sorts of UK debts, yet it has certain drawbacks as well. Thus, before you opt for this option, it is always better to have a thorough knowledge of the probable risks involved with it. 

  1. Fake debt management company: Often certain companies who claim themselves to be legitimate non-profit credit counselling agencies for providing debt help turned out to be fake. If you fall prey to one of these companies, then you may face the following issues:
  2. The counsellors won’t coordinate with the creditors properly to plan your repayment
  3. The company won’t keep their words of making monthly repayment
  4. May not keep your deposits well protected and make a proper monthly payment to the creditors
  5. Charge extra under the debt management plan
  6. False counselling and misguidance
  7. DMP can cost you more: Debt management plan result to cost you more than various other debt solutions. Since DMP is designed in a way to repay all your non-priority UK debts in full it may cost you a bit more. Repaying your debt within a short time frame may be expensive than other formal solutions.
  8. No legal binding: Under DMP whether a creditor will contact you or not, depends entirely upon his choice. Unlike debt consolidation loan process, DMP can’t legally prohibit the creditors from contacting the debtors during the tenure of repayment. Whether it is an IVA debt or any other UK debts, a creditor always has the liberty to contact you bypassing the financial counsellor. In fact, they can even choose to discontinue the plan and impose fees. They may even refuse to freeze interest and write off other charges.
  9. Rejected DMP Proposal: Since there are no legal obligations involved, there is always a chance that the creditors may refuse your DMP proposal. Even if you have proceeded as per the debt advice of your financial advisor, the creditors may refuse to co-operate. And even if a few creditors refuse, the plan will be of no use. All the creditors have to agree else the DMP fails.
  10. Longer repayment period: Although a DMP is planned in a way that its tenure of repayment mostly ends within 3-5years, it may get extended. Unlike other debt solutions, often DMP has a considerably longer phase of repayment. Since there is no fixed period, it may extend for nearly 10 years.

Whether you are planning to repay any sort of UK national debts or other IVA debts, a DMP is only applicable for non-priority debts. A non-priority debt is that debt failing to repay that doesn’t result in severe consequences. Non-priority debts that could be resolved with DMP include:

  1. Overdrafts and credit cards under the category of unsecured loans
  2. personal loan
  3. Any sort of loans or credits from family members or friends
  4. Various bank loans or other building society loans which are not secured on assets
  5. catalog, home credit or in-store credit debts
  6. credit card, store card debts or payday loans

Any sort of priority debts can’t be covered under the DMP. Be it direct debts or other forms of debts, DMP can’t be the option to deal with priority debts. The debts which can’t be paid off through DMP include:

  1. any sort of fines or penalties imposed by courts
  2. TV license or council tax
  3. Various bills and taxes including the gas and electricity bill Income Tax, National Insurance and VAT
  4. Rent, mortgage, or loans secured against any major asset like a home
  5. High purchase agreement

Citizen debt Help has a team of highly experienced financial advisors who can provide you with customized debt advice. Thus, they even help you figure out whether DMP will be the best-suited option for you or not, in case you are struggling with debt problems.

Our team will analyse your income and other financial commitments you have including your daily expenses and other debts. Based on that they will design the DMP. They will accordingly contact the creditors and convince them to get into an agreement under the DMP. The financial counselor will be the coordinating person between the debtor and the creditors. For any sort of debt advice, you can either call us at our national debt line 01615327813 or get in touch with us online through our chat option at free citizen debt help in UK .

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