Debt Management Plans

A Debt Management Plan (DMP) is an informal arrangement made between you and your creditors. It allows you to make regular monthly payments that you can afford.

Debt Alternatives charge a small one off administration fee for negotiating your DMP with your creditors, however we do not charge an on going monthly management fee. This is because we do not distribute your payments to your creditors. We make arrangements for you to make payments direct to your creditors and therefore 100% of your monthly surplus is distributed between them. However we will continue to liaise with your creditors on your behalf when necessary.

Unlike formal arrangements there is no fixed term agreed with your creditors and it is not legally binding. We may be able to get interest and charges reduced and will attempt to have these frozen, however no one can guarantee this will happen. You continue to make regular payments until your debts are repaid in full. Your monthly payments are calculated after we have carried out a full assessment of your financial situation. We will carry out further reviews at regular intervals to ensure that your payments remain affordable and manageable.

There are some advantages to a Debt Management Plan:

• Affordable monthly payments
• Flexibility
• 100% of your monthly surplus paid to creditors
• Third party creditor communication
• Regular reviews of financial situation

However, there are disadvantages:

• Continued risk of legal action
• Creditor harassment may continue
• Interest can continue to accrue
• Arrangement lasts indefinitely
• Credit rating affected