Debt Management Plan Pros & Cons
If you are finding that you can no longer keep up with your loan, credit card or store card repayments then a Debt Management Plan (DMP) could be the best option for you.
There are both advantages and disadvantages of using a DMP as a way to solve your financial problems.
Debt Management Plan Pros
- You only make one repayment each month, making your finances easier to manage
- Your payment is reduced and set at an amount you can afford
- All interest and charges on your debts can be stopped
- Your debt management company will speak to your creditors on your behalf
- It can help you to avoid becoming bankrupt
- Your debt management company will manage the repayments to your creditors for you
- The arrangement is flexible and so can be renegotiated if your circumstances change
Debt Management Plan Cons
- Since your repayments each month have been reduced it will most likely take you longer to repay your debts
- Although your debt management company will work to have interest and charges frozen there is no guarantee that your creditors will accept
- The arrangement is not legally binding
- It is unlikely to be a suitable solution if you have very high levels of debt
- Only unsecured debt can be included in a DMP and so it cannot help you with mortgages and other secured debts
- Your credit rating will be affected since you will no longer be making the agreed repayments
Find out more about Debt Management Plans
Based in Lancashire, Spencer Hayes provides free impartial debt help and advice to people throughout the UK. Our sympathetic counsellors can help you to find the solution whatever your financial situation.
To find out more about the pros and cons of Debt Management Plans call our helpline on 0800 028 4422 or complete the enquiry to request a call back.
More information
- IVA Questions and Answers
- Debt Management Plan FAQs
- Alternatives to Bankruptcy
- Debt Management Company Lancashire
- IVA or DMP - which is best?
