Debt Management Plan

A Debt Management Plan (“DMP”) is an informal, ongoing agreement where a debtor pays a monthly consolidated payment to a debt management company which negotiates with and pays creditors on behalf of the individual.

Regular payments will be made to the debt management company, which will have assessed what you can afford.

Advantages of a DMP include:

They can ‘buy time’ whilst a more permanent solution is found.
Monthly payments are set at an affordable rate.
Generally there is no up-front fee.

Disadvantages of a DMP include:

Typically there is no fixed term to a DMP and it may continue indefinitely without the principal debt reducing.
Some creditors may not agree to a DMP and take further court action to recover their indebtedness.
Creditors may continue to add interest and charges.
It is an informal scheme and creditors cannot be held to what they may have initially agreed.
The extent to which an individual’s financial problems are resolved is limited due to uncertainty over future creditor action.

Blades Insolvency Services does not undertake DMPs but is able to advise on the merits of a plan and, where appropriate, direct you to a specialist provider.