A few readers have asked recently about long term debt payment arrangements. What information do they have to give to a debt collector? Can they can be asked to pay more? etc. Let's look at three different cases: an arrangement with a creditor; what happens if you use a DMP firm; and what if the payment is to a CCJ. Arrangement with a creditor Mr A asks: I have had an arrangement … [Read more...]
You may prefer to look at Debt Camel's Guide to DMPs. That has links to the most important articles, covering DMP advantages and disadvantages, the different ways you can set one up, things that can happen in a DMP and how to decide if one is the right option for you.
DMPs can be useful if you have a temporary financial problem for a few months or a year or two, or as a long term way of clearing you debts, but you need to be wary of DMPs that will go on for too long.
My article on How to ask for a refund of payday loan interest looks at what to do if you had payday loans you couldn't repay without borrowing again. It also applies if you have repaid your loans already or if you are still repaying them. But if you still have payday loans, what do you do about this month's repayments? You can't put in a complaint and then carry on borrowing! Payday loans … [Read more...]
If you want a debt management plan (DMP), where your creditors are asked to freeze interest and accept a lower monthly payment, you can either run it yourself or go to a debt management company to run it for you. If you are nervous about dealing with creditors or you have a lot of them, it makes a lot of sense to use a debt management firm. But which one? This article looks at some of the … [Read more...]
A reader asked in a comment on my article on How does a DMP affect your credit rating? : "I have 6 months left on my DMP and I know my credit rating is rubbish. Will my rating improve once this is paid off?" That's a simple question, but it needed rather a long answer. This article is for people who are near the end or who have already completed their Debt Management Plan (DMP) by repaying their … [Read more...]
A reader asked about applying for a mortgage when she is in a Debt Management Plan (DMP): "I have been in a DMP for 8 years and still have 6 to go as I still owe £16,000. With hindsight, I should have gone bankrupt! My parents will give us a generous deposit next year, but they don't know about my debts so I can't use their money to end the DMP. Will I be able to get a mortgage? On my credit … [Read more...]
Debt problems come in all shapes and sizes. So do personal relationships. And debt management plans (DMPs) are very flexible arrangements. The combination of all of these means there isn't a simple answer to the question about how your DMP will affect your partner, but here I look at the most common questions people have. Will my partner's income be taken into account? In debt management, you … [Read more...]
The pension changes that came in in 2015 gave many people over 55 a new option for paying off their debts, by taking money from their pension pot. I've looked at whether this is generally a good idea in Should you use your pension to pay your debts? but in this article I focus on people who are already in a Debt Management Plan (DMP). This article is relevant for people who are over 55 (or … [Read more...]
If you are thinking about a Debt Management Plan (DMP), you may want to know how many DMPs succeed, and how many run into problems. This turns out to be a surprisingly difficult question to answer! Celebrating DMPs that do complete Many DMPs do get to the end and all the debt is paid off. Here are some recent announcements in late 2018 and early 2019 from the three main providers of free debt … [Read more...]
You can use gifts to make settlement offers to debts you are in arrears with. These offers are often called called "Full and Final offers" and F&Fs for short. They are explained in detail here. Using a gift of money to do this is almost always a good idea! In a F&F that 2k could potentially be used to clear £3,000, £4,000 or more of debt, so it can be an excellent use of the … [Read more...]
A debt management plan (DMP) is a good debt solution for many people. If you are trying to decide whether you need one, you may want to know how bad the effect will be on your credit file, and how long it will be before your credit rating recovers. There isn't a simple answer however: DMPs are used in a lot of different situations; because they are "informal" arrangements creditors don't … [Read more...]