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1-Jul
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What is a Debt Management Plan?

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A Debt Management Plan or DMP is a payment strategy agreed between you and your creditors. It enables you to pay back non-priority debts such as credit cards in a manageable way.

Normally, the Debt Management Plan is managed by an agency or DMP provider, so you don’t have to deal directly with companies you owe money to. You pay your DMP provider an agreed amount each month and they then divide it between your creditors.

What kind of debts can be paid off with a DMP?

Debt Management Plans aren’t much help if you’re late with your mortgage, rent or council tax. They can only be applied to debts that are considered ‘non-priority’. Non-priority debts might include:

  • Credit cards.
  • Store cards.
  • Personal loans like payday loans or finance agreements.

There are several different types of DMP to choose from and there are several non-profit agencies which can give you free advice and assistance. If you decide that a Debt Management Plan is right for you, the one you choose should help you to consolidate your payments and pay off your debt in a reasonable period.

 

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Under the current legislation, most small personal loan providers don’t charge an annual interest rate (you’ll know this as an APR %). The maximum you will be charged is a flat 20% Establishment Fee and a flat 4% Monthly Fee. The maximum comparison rate on loans between $300 and $2000 is 199.43%. This comparison rate is true only for the examples given and may not include all fees and charges. Different terms, fees or other loan amounts might result in a different comparison rate.

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