DEBT SOLUTIONS
Debt Management Plans – Help & Advice
Frequently Asked Questions
DMPs are not legally binding, meaning you are not tied into anything for a minimum period and can cancel at any time.
However, this also means that your creditors are not bound by the agreement. It isn’t guaranteed that they will freeze the interest and charges on your debts, and you can still be contacted by them.
The length of a DMP can vary, but they tend to be in the region of 5 to 10 years.
There are numerous factors which can affect the length of a DMP, such as your overall debt level, how much your payments are and whether the creditors agree to freeze interest or not.
Being in a DMP will more than likely affect your credit file and score. This is because you could be paying less than a creditor’s requested minimum payment amount.
There isn’t a specific place in your credit report to register that you are on a DMP, but the debts that are included can have a marker added to show that you are making payments through one. This may reduce your chances of obtaining credit whilst in your arrangement, as it shows that you are having difficulty keeping up with repayments.
However, a DMP does look better on your credit file than having unpaid debts and defaults showing.
Your credit file holds a record of your credit activity for the last 6 years, so any evidence of a DMP – details of court action, defaults or missed payments – will not be removed from your record until six years after your final payment was made.
Unfortunately, assets such as your home or car cannot be included in a DMP due to them being secured debts.
Payments for your mortgage or car finance should be included when you are working out your budget for your DMP. This will allow you to pay for your secured debts first and reduce the risk of losing your home or car.
Creditors may also agree to freeze interest and charges on your debts, however, this is not guaranteed.
If they reject your proposal, you may find that you are more suited to alternative debt solutions such as an IVA or Trust Deed. Creditors may also lose confidence in your ability to pay and take legal action against you.
Content relating to Debt Management Plans is for information purposes only. Carrington Dean does not offer this solution to its clients. In any instance where a DMP is most suitable option for a customer they will be recommended to the free debt advice sector.