A reader asked:
I’m being told a DMP would take more than 10 years. Is that too long – I hope my situation will improve?
Ten years is a long time. But lots of things can happen during a Debt Management Plan (DMP) which will change the time it may take. Here are seven ways the DMP could be speeded up – not all of them may apply to you.
1. No DMP fees
If the DMP firm you are talking to charges monthly fees, these reduce the amount that goes to your creditors so the DMP takes longer.
2. Other commitments end
You may have expenses that you know will reduce or end in the next few years, for example when you become entitled to more free hours childcare.
You may also have priority debts outside your DMP that will be cleared, such as car finance, deductions from benefits, or clearing a tax bill.
Anything like this will allow you to increase your payments to the DMP. so it will finish sooner.
Of course, some new commitments such as a new baby could slow progress in your DMP.
3. Get refunds from affordability complaints
If you have credit cards, catalogues, loans or overdrafts going into your DMP, think about whether you can make affordability complaints. See affordability complaint articles where there is a different article for each type of debt, with a template letter you can use.
Winning an affordability complaint will result in the debt in your DMP being reduced or cleared – so the DMP will end sooner. You can also make complaints about other debts that have been settled in the last few years. There if you win any you will get a cash refund.
Making these complaints isn’t a problem for a DMP.
4. Increasing income
Your income will probably go up over the next few years, but so may your expenses. Sometimes you will feel confident that your income is likely to increase more than your expenses, for example if you are early in your career. This would allow you to increase your DMP payments.
But if your health is poor or you are close to retirement, is it more likely that your income will fall?
5. Partial Settlements
After some time in a DMP, it is likely some or all of your debts will be sold to debt collectors. Debt collectors are far more likely to accept a settlement offer from you than the original lender. So if a relative could offer you some money, or you get a bonus or a refund, or you inherit some money, you could clear £1000 of debt in your DMP for £500 say.
This reduces the debts remaining in the DMP so they will be cleared faster.
6. Creditor unable to produce the CCA agreement
If your DMP has going on for years, and debts have been sold to debt collectors, it may be worth asking the debt collector to produce the CCA agregrrement for a credit card, catalogue or loan. See How and when to ask for the CCA agreement for details. This is more likely to succeed if the account was opened a long while ago or if it has been sold more than once.
If a copy of the CCA agreement can’t be produced by the debt collector, the debt can’t be enforced in court. So you can stop paying and ask for it to be removed from your DMP.
7. Ask for a write off (unusual)
This won’t usually work if your DMP is going well. But if you develop major health problems or there is another reason why you can only make token payments, and this isn’t likely to change, then you may be able to get a debt written off.
Or consider insolvency
But if your DMP is very long because you can only make low payments and none of the above ideas look as though they will make much difference, you should consider if a DMP is the right option for you. Bankruptcy, a DRO or an IVA may be preferable.