Debt Management Plan (DMP)
A DMP allows you to make a repayment that is realistically affordable once all your essential living expenses have been taken into account. You make one monthly payment which is distributed to your creditors, typically the new payment is half the amount you are currently paying, but will depend on individual circumstances.
These are voluntary agreements with creditors to repay debts over an extended period. They constitute an arrangement between yourself and a Debt Management company who agree to supervise and distribute your debt repayments. They take a payment each month and split it between your creditors.
It is sometimes possible to restructure repayments into a more convenient plan and you would therefore not have to sell your home as part of the agreement.
Interest charges can sometimes be stopped, and the Debt Management company will charge a small fee for their services. Debt Management usually works best for those with at least three creditors, debts of £3,000 or more and at least £125 a month of free income to help settle the debts.
About Full and final settlement
Full and final settlement is the process of asking creditors to accept a lump sum which is less than the full balance owed on the debt, and in return for having a lump sum payment, the creditors agree to write off the rest of the debts. They also agree in writing to change your credit reference file details to show that the balance is "satisfied".
The lump sum payment is often determined by a combination of disposable income and the level of equity you have in your property. Or perhaps a family member is offering to settle the debt for you...
Full and Final settlement is not guaranteed. The creditor may refuse an offer, but if they do refuse, there are still a number of options available for you to proceed..
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