Obtaining a debt management plan

How to acquire a debt management plan

The following guide should clearly identify the measures you will need to take in order to acquire a debt management plan (DMP).

Stage 1: Address your priority debts first

Due to its nature, a debt management plan only involves your non-priority debts, which include all unsecured loans, overdraft, and credit card debts as well as finance amassed from store cards. Prior to determining whether to obtain a debt management plan, you will need to ensure that you leave yourself with a sufficient level of money from your income each month to address your priority debts, including expenses such as your mortgage, rent or council tax. If you are finding it difficult to make payments toward your priority debts, then you might have to consider utilising a different debt solution to address your problems, because it might be better suited to your circumstances.

Stage 2: Ascertain the suitability of a DMP for you

Prior to determining whether you obtain a debt management plan, you will need to assess your aims for getting one- do you wish to acquire a DMP in order to repay the entirety your debt swiftly or is it of greater importance to you to have an affordable monthly repayment plan with a representative under your services who interacts with your lenders for you? If your aims fall into the former, it may be advisable for you to consider an alternate debt solution.

Step three: Determine your budget

A debt management supplier will typically assist you when determining your budget, including how much you can realistically contribute toward your DMP repayments each month in order to leave you with sufficient disposable income to maintain your current standard of living. However, it is advised that you first take these steps yourself first; analyse how much money goes into your household each month and then identify how much you spend on priority debts such as your energy bills, council tax and housing costs. The figure you have left after this is the amount you can afford to pay toward your ‘non priority debts’ included in your plan, and you can then revise this with your supplier in order to concretise this repayment offer.

Step four: Consider whether you need to pay someone to facilitate your DMP

Most debt management suppliers will charge fees, but certain organisations will assist you with the creation of your DMP without any costs at all. It is imperative that you keep in mind that you do not need the services of an external party to process or pay for your debt management plan.

If you decide to utilise the services of a supplier who charges a fee, then ensure that you area made fully aware of how the charges will impact the overall length of your debt management plan, the total level of money each month that is given to your lenders and how much goes to the DMP supplier.

Step five: Decide on which DMP supplier to utilise

There are numerous ways to find the best DMP suppliers about, including:

  • Visit your local Citizen’s Advice Bureau online or get into contact and make an enquiry
  • Call the national debt line for suggestions
  • Conduct an online search on Google about the best DMP companies in your area
  • If you are receiving financial advice from an organisation at present, make an enquiry about the issue to them.

However, it is hugely important that you remember that just because a debt management company has an alluring online presence or is strongly advertised, that this does not mean that they are the best for the service they provide. Ensure you conduct a thorough study of the industry and servicers available to you before deciding which one to use.

Remember that just because a DMP provider has a flashy website or a big advertisement, this doesn’t necessarily mean they will offer the best service for you. Make sure you do your research into the company before you choose.

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