Where to go for a Debt Management Plan

canstockphotoIf you’ve already looked into whether you need an IVA debt management plan or possibly even bankruptcy – you should already be aware of the different pros and cons of each. If you aren’t – please seek expert independent and objective advice. But if you have looked into the options and have decided a debt management plan (or DMP) is the best solution for you – then how do youy decide where to go for one?

There are various options available to you. A DMP is an effective way of paying creditors for people who have found themselves in too much debt. A counsellor calculates the amount you can afford to pay after considering your essential on-going debts and bills like mortgage payments, utilities, council tax and food and deposits any money left over with a debt management company as a single monthly payment. The company negotiates one affordable monthly amount to your creditors who are paid on a monthly basis.

Your payments are based on income, but none of your debts are written off. The good news is that interest payments are stopped. A DMP is flexible in that if your circumstances change then you may be able to amend your payment to suit your ability to pay.

So who do you use?

Well, there are some charities that don’t charge commission or fees for arranging and managing the plan. But in this situation, the charities don’t try to negotiate write-offs or early settlement of your debts as they are funded by your creditors. The same is true of some private companies – whilst others charge very high up-front and monthly fees.

If you choose to pay for the plan, then somewhere around 15% is an average percentage to the company running the plan. The advantage here is that the company isn’t funded by your creditors, so has more of a vested interest in negotiating a write-off or early settlement on your behalf – and is likely to be tougher in negotiations on your behalf.