If you`re having trouble making regular repayments, a debt management plan (DMP) can reduce some of the pressure. But it can also be difficult to borrow money from lenders – it can affect your lifestyle and limit your options. However, a well-managed DMP can help you get your finances back on track and improve your long-term credit profile. If you and your partner are facing debt, you should consider creating a common DMP, in which you would both also be responsible for the repayment plan. It doesn`t matter if you have different levels of income or debt. You can also include debts in a common DMP that are only in one name. A DMP is not legally binding, so it can be cancelled at any time by you or your creditors. You can use a DMP provider that will advise you on debts, deal with creditors and calculate your payments. The debts remain in your report for six years, from the date they were paid or cancelled. A DMP means that you can pay off your debts more slowly, so that your score can be negatively affected for longer. Before launching a plan, the trader should specify the terms and conditions, including: Create a plan with a debt management company authorized by the Financial Conduct Authority (FCA). Browse the financial services registry looking for a licensed business. When you launch a debt management plan, you make a new promise to pay off all of your debts.
If you are faced with guaranteed debts or if a DMP plan is prohibitive, you should consider alternatives. If not indicated in the agreement, your creditors can still: It is possible to get credits if you have a low score, although your options usually have low limits and high interest rates. However, the terms of your DMP may mean that you cannot borrow more money until you complete the plan. If you are allowed to claim credits, you should make sure that you can pay the refunds. Elsewhere in the European Union, the regulation and non-regulation of credit counselling services and their approaches, including the PSP, vary widely. In Sweden, guidelines for credit counselling are easily made available by the Swedish Professional Association (OCT) and creditors are encouraged to use them instead of the judicial system. In Ireland, the Irish Trade Union Congress (ICTU) makes information on debt settlement available directly to debtors. In Latvia, a debt advisory firm called LAKRA works with employers to help indebted workers.  Note that your DMP is not registered as a separate entry in your report. However, creditors must add a DMP flag to your account entries. This reassures anyone who looks at your report that you are making reduced payments as part of a plan. Make sure you understand the cost of your plan and how you pay for it.
Authorizing a DMP depends more on your disposable income than on the amount of debt you have (your disposable income is the money you have left after paying the cost of living such as rent, food bills and energy bills). A DMP is an informal agreement between you and your creditors regarding the repayment of your non-priority debt. Non-priority debts are things like credit cards, credits and memory cards. When choosing a debtor management plan provider, make sure that: You can use a debt management plan only for non-priority debts. Some PMPs also exclude certain types of unsecured debt, such as student loans.B. The credit counsellor helps you budget your revenues and expenses and get advice on your debt, including whether a debt management plan is warranted. Once you`ve launched your DMP, all you need to do is make a monthly payment to cover all the debts included in the plan. Your supplier shares this money among your creditors. You will continue these payments until your debts are repaid or you are able to re-make full upfront payments. You don`t p