DMP

What is a DMP?

DMP is short for a debt management plan. A dmp or debt management plan is an informal arrangement between you and your creditors for a reduction in your contracted monthly repayments of your debts. A DMP will result in your contract being broken lengthening the period in which the debt can be repaid.

A downside to a dmp is that interest will still be charged against your balance, unless you are close to bankruptcy. In this case the kind creditors will freeze the interest charges and perhaps accept token payments.

Free DMP Companies

There are three ways you can obtain a DMP. The first way is contact a free debt management organisation like the charity CCCS or the non-profit organisation PayPlan. It is worth bearing in mind though that these organisations are wholly funded by the very people who recklessly lent you the money - the creditors.

I certainly have never seen people outside of shops rattling their tins for money for the charity CCCS, have you? Ask yourself the question, why are do the creditors fund these organisations? If like me you are a suspicious sole then you'll have made your mind up about these free organisations.

Fee Charging DMP Companies

The second avenue for those looking for help setting up a DMP are the fee charging debt management companies or commercial debt management companies. For a monthly fee a dmp company will calculate how much you can afford to pay towards a dmp. Then they'll contact your creditors, negotiate for a reduce repayment plan and proportionately distribute your money. They do exactly the same the as the free organisations above but charge a fee. So with a fee charging dmp company you are the customer and with a free dmp organisation you don't have any financial relationship with them.

DIY Debt Management Plans

The third way and in my opinion the best way you can obtain a dmp is to do it yourself. Yes, it is straightforward and relatively easy. The above 2 ways of organising a dmp does not stop the creditors from contacting you nor does it ensure that your payments are being paid regularly and on time. If you think about it all you need to do is to draw up a statement of affairs, obtain your current balances and write to all your creditors offering them a proportionate amount or pro rata amount of your disposable income. This way you are showing the creditors that you are not only taking responsibility for your debts but you are also showing some initiative in getting the debt repaid.

If you need help with a dmp read my article above on DIY debt management which guides you through the process of doing your own dmp. I've even drawn up some debt management template letters. If you have any questions just post them on our forum and you'll get a quick response.

DW George