Why choose a Debt Management Plan?
A Debt Management Plan (DMP) is a halfway house between doing separate deals and an IVA. A DMP is administered by a debt management company acting on your behalf. Typically, you agree a set amount to pay each month. This is then shared between your creditors in proportion to their debts. However, you should bear the following in mind:
- Creditors may continue to charge interest on their debts.
- A DMP is not a legally binding agreement.
- Creditors may decide not to participate in a DMP and continue to pursue you.
- The costs of a DMP are typically taken as a percentage, from the monthly contributions you make.
Other Informal Settlement of debts
This may be a viable alternative if you have a relatively small number of creditors and you have the time, patience and ability to deal with your debts on your own.
This may be a viable alternative if you have a relatively small number of creditors and you have the time, patience and ability to deal with your debts on your own.
However, it is also best to seek legal advice to ensure that any compromise you reach with your creditors is legally binding otherwise you may still be faced with a formal insolvency procedure later
on.
