A Debt Management Plan ("DMP")
A debt management plan is an informal procedure under which a third party, usually a specialist debt management company ("DMC"), will seek to broker an agreement between a person owing money ("a debtor") and his or her creditors, for which they will charge a fee.
Under the agreement, the debtor will be asked to make an affordable monthly payment to the DMC out of any surplus income, after living expenses. After deducting their fees, the DMC will then offer a proportion of this monthly payment to each of the creditors, the actual amount being dependent on the relative size of that creditor's debt.
In considering a DMP, it should be noted that whilst creditors may be prepared to accept a reduced monthly payment, they might not be prepared to stop any interest accruing on the outstanding amount or waive other account charges. This is very important as, typically, you will be required to pay your creditors in full under a DMP, albeit over an extended period of time.
Furthermore, because it is an informal arrangement, creditors cannot be forced to accept a DMP and they may continue with any legal action against you.
The ability of a third party to implement a successful DMP on favourable terms is therefore dependent on a combination of your own personal circumstances, the attitude of your creditors and the standing of the DMC concerned.
Although Chamberlain & Co does not itself deal with DMPs, we can provide you with details of appropriate DMCs.
Call us on 0800 195 4585 to discuss if a Debt Management Plan is
appropriate for you