Debt Management IVA Specialists

You can only include ‘non-priority’ debts in a DMP, such as:

• Credit Card debts
• Payday Loans
• Personal loans
• Benefits overpayments
• Store Credit / Cards
• Overdrafts
• Bank / Building Society

Some examples of ‘Priority’ debts that can’t be included in a DMP are:

• Council Tax
• Utility Bills
• Mortgage or Rent Arrears
• Court Fines
• Child Support
• Court Fines
• National Insurance
• TV Licence Arrears

Priority Debts are debts that must come first when carrying out repayments to your creditors – non-payments towards these debts can have very serious consequences and can land you in trouble such as prison or large fines.

An IVA is a legal agreement, but a Debt Management Plan (DMP) is informal and both involve you making monthly payments.

IVAs last 5 years, after which the remainder of your debt is written off, whereas with a DMP you continue to pay until your outstanding debt is paid, so this differs between people.

You can read more if you’re considering an IVA or Debt Management Plan.

It’s crucial that you do make an informed decision – every situation is different, and you’ll need to choose the path that feels right for you personally. Debt Management Plan may be a suitable choice for you if the following circumstances apply:

• You have £2000 of eligible debt.
• You would like a 3rd Party to deal with your debts on your behalf and negotiate with your creditors and if so, are able to pay any necessary fees that these companies charge.
• You can afford monthly payments towards your creditors.
• You can still afford to pay towards your bills and any debts that aren’t included in the Debt Management Plan.
• You would like an informal arrangement which you can cancel at any time

During your DMP, the firm will pay your lenders on a monthly (or every 4 weeks) basis, and will only send the payment when they have received the amount in full. So, if your situation means you can only pay weekly or fortnightly, it may be that you fall into arrears due to late or overdue payments. If this is the case, it may be a good idea to look into other ways you can manage your debt.

Being on a Debt Management Plan or reducing payments directly does have a knock-on effect on your credit score. But with that said, the DMP is not a secured contract – you can leave and return to your original payments at any time. Plus, as a DMP is not a formal solution to debt so your details do not appear on the Insolvency Register.

Your creditors can take legal action if you do not make payments of the agreed amount or on the agreed dates made between you and the lenders.

Your monthly payments can include multiple debts in one, and the monthly payments are intended to be manageable and affordable.

Once you enter into a DMP, you can request for your creditors to freeze further interest and charges (there is no guarantee).

A monthy payment figure is estimated by taking into account the money you owe to creditors and money you have coming in each month.

Once this is known, a request to your creditors to accept a lower payment can be made, along with freezing of interest. If accepted, then you start to make one monthly payment that is distributed to your creditors.

The end of your DMP depends on the amount you pay back per month. If your creditors agree to reduce interests and charges, the time period of the DMP can be reduced greatly.