Debt Management (single payment plan)

Debt Management (Single payment plan)

Firstly, is a Debt Management Plan (DMP) suitable to me?

A debt management plan is a debt solution for anyone who has unsecured debts that they can’t afford to repay. A DMP requires you to have a surplus income each month (money left after you’ve paid all your living costs such as household bills & priority debts).Advantages of an Informal arrangement. (DMP)

You only pay what you can afford based on the statement of affairs. (SOA)
You will no longer need to deal with your creditors alone we will be acting on your behalf in most dealings with them.
We will ask your creditors to freeze interest and charges, this stops the debt increasing.
You will pay only one monthly payment to debt free me who will pay your creditors on a pro-rota basis.
You will receive a monthly statement showing the payments sent.
You will remain in control of your assets i.e., property.
This will enable you to pay the debt back at what you can afford at present rather than your contractual agreement.

Disadvantages of an Informal arrangement. (DMP)

These plans are not legally binding so creditors do not have to agree to the repayment schedules. However, if the arrangement works well the creditor will be more than happy to co-operate.
Your creditors are under no obligation to accept your offer of reduced payments and if they do accept they are entitled to change there mind at anytime.
They can ask for a review of your situation which could cause your payments to increase.
They are not obligated to freeze interests and charges on your account.
They may freeze interest for a limited period of time or charge interest at a reduced rate.
It is possible that the total debt will increase. Your credit rating will be effected if your contractual payments are reduced or stopped.
It is likely that you would be required to pay your creditors in full over a number of years. It is possible that you will continue to pay them for some considerable time after which an IVA (Individual Voluntary Arrangement) would have been completed. It is also feasible that you will be required to pay greater contributions.
You will have no protection from the courts, and the creditors at anytime can decide to issue a judgement, bankruptcy petition or any other legal process in respect of there debt.

Is it a loan?

No, a debt management plan is exactly what it says it is a way to help manage your debts. We do this by offering a reduced payment to each of your creditors and then negotiate to freeze interest and charges.

How long will my Debt Management Plan (DMP) last?

The length of your DMP depends on your individual situation it also depends on your level of debt and the monthly deposable income available.

When creditors freeze interest and charges, the length of the DMP can be greatly reduced example, if you owe £15,000 and you can afford to pay £180 per month the DMP will last for just short of 7 years (83 months) this applies only if the payments are maintained each month and the creditors freeze interest for the length of the plan. Your DMP can be completed sooner if you circumstances improve and your payments are increased.

Will my creditors agree to my a payment.

Creditors don’t actually have to agree to the payments, but due to debt free me’s reputation in the credit industry; many creditors accept our offers as they know we work to realistic guidelines.

Will interest and charges be frozen?

Creditors are not obligated to freeze interest and charges but again debt free me has a reputation for realistic payments that the creditors are often more co-operative as they see that the debtor is making ever effort to clear there outstanding debts. The creditors will make there decision on freezing interest and charges when they have viewed the Statement Of Affairs (SOA) compiled by us.

Can my creditors still issue me with a County Court Judgement? (CCJ)

As an informal arrangement (DMP) isn’t legal binding creditors are still entitled to take action against you. We will complete all the relevant paperwork required if this happens, and the payment is likely to remain similar or if not the same to our original offer.

Will I get a default notice?

Your creditors are entitled to issue a default notice as in reality you are defaulting on your original credit agreement. This does not mean that the creditor is definitely going to take action. Note: If a default is issued this will stay on you credit file for 6 Years from the date of its issue.

How do I make the payments?

The payments will be collected by us usually by standing order and then paid to the creditors. Based on the information you provide we will then disburse your funds to the creditors or their appointed collectors.

Can I cancel my debt management plan when I like?

You are free to stop the debt management plan at anytime but we insist you put it in writing to debt free me so we can inform all of your creditors of your intentions. If you are stopping your DMP due to further financial problems please let us know and we may be able to restructure your plan. Note: If you cancel the DMP creditors may resume interest and charges.

Who informs the creditors?

We at Debt Free Me will contact your creditors to inform them of our intentions to enter into a DMP. We will explain your situation and present a statement of affairs (SOA) which will outline the offer of payment to them, this should mean that the amount of communication is eased and will cut the stress involved.

How is my credit rating affected?

The likely hood is that if you have financial problems your credit rating has already been affected. Our aim is to get interest and charges frozen to help clear your debt quicker. Your credit rating will be effected if your contractual payments are reduced or stopped.

Do creditors stop making calls and sending letters?

Creditors are still within there rights to contact you directly. Debt free me can not and will not guarantee that all phone calls and letters will cease. Our experience has shown us that once the informal arrangement (DMP) is gone through its due process that they should stop completely. Remember, any letters you receive from your creditors please forward them to us in the pre-paid envelopes provided so we can take immediate action if required.