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What is a Debt Management Plan?
Simply put, a Debt Management Plan – or a DMP – is a flexible, financial solution that allows you to pay off your unsecured debts at an affordable rate; it is also tailored to your own personal financial circumstances. If you find yourself in financial difficulty due to a temporary change in your circumstances, a debt management plan can be a viable short-term solution for you; conversely, it can be a long-term service for anyone who is struggling with their debts, but their situation will not allow them to engage in any other financial solution.
So, how does a Debt Management Plan work?
If you can imagine consolidating all of your debts under one roof with one monthly payment – you’re almost there. Firstly, you’ll have to work out a budget: take your monthly income then subtract all of your monthly expenses – rent, mortgage, utilities, food, transport, insurances, even savings – which will leave you with an amount left over to pay to your plan. Here’s a quick example:
Income = £1,250.00
Expenses = £1,180.00
Payment amount = £70.00 per month
Your chosen debt management plan provider will then distribute this money to all of your creditors on your behalf, this payment amount is usually agreed and accepted by all of the creditors on the plan. The most important thing to remember is that you will not have to take out more credit to engage in a debt management plan, but you’ll likely have to pay a monthly fee for the service which is usually included within your payment. The debt management plan will then last until all of the debt balances have been cleared.
And the benefits…?
There are many benefits to a debt management plan which is why it is one of the most common financial solutions in the UK.
Would a Debt Management Plan be the best solution for me?
That all depends on your situation! You would first want to receive some free debt advice from an FCA-regulated company such as Angel Advance. Obtaining free debt advice is the first step towards taking control of your debts and it will determine whether a debt management plan will work for you.
You can get free debt advice by calling us on 0800 210 0638 or by visiting our free Online Debt Advice Tool here: https://debtadvice.angeladvance.co.uk/
Angel Advance provides online debt advice to get you back on track and make your finances more manageable.Get Debt Advice Now