What are the disadvantages of a debt management plan?

It does not prevent county court judgements (ccj) which can be secured on a residential property by means of a charging order and ultimately converted into an order for possession and sale. Similarly they do not prevent bailiff action, the issue of statutory demands and ultimately the issue of a bankruptcy petition. If the bankruptcy is not stayed or annulled or reversersed into an individual voluntary arrangement (iva) it may ultimately result in the sale of your assets, including your home.

What are the advantages of a debt management plan?

The debtor pays over monthly surplus income, after living expenses. After any fees, the balance is paid to creditors. Creditors get reduced monthly payment but might not stop interest or charges and usually get paid in full over an extended period of time. The implementation of a successful debt management plan is dependent on a combination of your own personal circumstances and the attitude of your creditors.

What is a Debt Management Plan?

A debt management plan (“DMP”) is an informal procedure under which usually a third party will seek to broker an agreement between a person owing money (“a debtor”) and the individual’s creditors.

It offers no form of legal protection from any individual creditor, no enforced freezing of interest, no debt reduction or legally enforced full and final settlement and no finite repayment period.

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Debt Management Process

Assess

We assess if a debt management plan, iva, bankruptcy, debt relief order, administration order, interim order or a time to pay agreement with HMRC is the best option for you.

Consultation

Debt management plans are usually only the most appropriate option and recommended by us in a limited range of circumstances and historically have often been mis-sold.

Proceed

Charities offering debt advice are the main providers of this service as they do not charge the client a fee but charge the lender a collection fee.

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Get an instant quote and advice

Here at Chamberlain & Co, we are happy to offer you an initial free consultation about Debt Management and its alternatives such as an iva, bankruptcy, debt relief order, administration order or time to pay agreements with HMRC.

We are particularly expert in higher value complex iva’s which may include trading situations, property portfolios and substantial personal guarantees often arising out of failed business ventures.

Call us on 0113 242 0808 or e-mail us at advice@chamberlain-co.co.uk.

Advantages & Disadvantages of Debt Management Plan

Advantages of Debt management

The debtor pays over monthly surplus income, after living expenses. After any fees, the balance is paid to creditors.
Creditors get reduced monthly payment but might not stop interest or charges and usually get paid in full over an extended period of time.
The implementation of a successful debt management plan is dependent on a combination of your own personal circumstances and the attitude of your creditors.

Disadvantages of Debt Management Plan

It does not prevent county court judgements (ccj) which can be secured on a residential property by means of a charging order and ultimately converted into an order for possession and sale.
Similarly they do not prevent bailiff action, the issue of statutory demands and ultimately the issue of a bankruptcy petition.
If the bankruptcy is not stayed or annulled or reversersed into an individual voluntary arrangement (iva) it may ultimately result in the sale of your assets, including your home.

Debt Management Plan (DMP) FAQs

Who is a debt management plan for?

For individuals who have experienced a temporary drop in income and are unable to meet their ongoing financial obligations in full, but expect to be able to do so again in due course.
For individuals who cannot currently meet their financial obligations in full but who expect a windfall in the foreseeable future which will enable them to do so.
For individuals who cannot meet their current obligations in full from their current income, but are able to do so over a longer timescale.

What is an informal arrangement?

Where an individual has a small number of creditors and there is no immediate threat of legal action, it may be possible to agree an informal arrangement direct with their creditors. This personal financial arrangement could be of particular interest to individuals who do not wish a third party to be involved in their financial affairs on an ongoing basis.

Who is an informal arrangement for?

An informal arrangement will benefit people who have a small number of creditors and are in need of some breathing space before paying. This is on the basis of no immediate threat of legal action.