What is a Debt Management Plan?
A Debt Management Plan or DMP is a payment strategy agreed between you and your creditors. It enables you to pay back non-priority debts such as credit cards in a manageable way.
Normally, the Debt Management Plan is managed by an agency or DMP provider, so you don’t have to deal directly with companies you owe money to. You pay your DMP provider an agreed amount each month and they then divide it between your creditors.
What kind of debts can be paid off with a DMP?
Debt Management Plans aren’t much help if you’re late with your mortgage, rent or council tax. They can only be applied to debts that are considered ‘non-priority’. Non-priority debts might include:
- Credit cards.
- Store cards.
- Personal loans like payday loans or finance agreements.
There are several different types of DMP to choose from and there are several non-profit agencies which can give you free advice and assistance. If you decide that a Debt Management Plan is right for you, the one you choose should help you to consolidate your payments and pay off your debt in a reasonable period.
