Advantages of a Debt Management Plan

  • A lower monthly payment based on affordability.
  • Request to freeze interest and charges where possible.
  • Support in dealing with your creditors of whom you owe money to.
  • Flexible plan so payments can change to meet your circumstances.

Disadvantages of a Debt Management Plan

  • You will have to repay your debt in full with a DMP
  • Creditors may reject the offers put forward to them of reduced payments
  • Your creditors can still pursue legal action against you
  • Your credit score will be negatively impacted by entering into a DMP
How does a DMP work?
In just a few steps from making the first call, you could be on the road to controlling your unsecured debt.
Step 1
We will take some details & assess whether a DMP is right for you
Step 2
We will refer your case to a licensed debt management company who will review your income and expenditure
Step 3
Negotiations will take place with your creditors with a view to reducing monthly payments
Is a DMP right for me?
To qualify for a debt management plan, you must have a monthly surplus income of at least £80.
At Michael Alan, our team will assess your individual circumstances before providing a suitable debt solution.
There are some things to consider before managing debts through a DMP:
Pros of Debt Management Plan:
  • Single monthly payment: One of the main benefits of a DMP is that it consolidates multiple debts into a single monthly payment. This can simplify your financial situation and make it easier to manage your debts.
  • Lower interest rates and fees: In many cases, creditors may agree to lower interest rates and waive certain fees when you enroll in a DMP. This can result in lower monthly payments and potentially save you money in the long run.
  • Professional assistance: DMPs are typically offered by credit counseling agencies that provide professional assistance in managing your debts. They can help you create a budget, negotiate with creditors, and provide financial education to help you improve your financial situation.
  • Reduced stress: Dealing with multiple debts can be stressful. A DMP can provide you with a structured plan to repay your debts, which can alleviate some of the stress associated with managing multiple payments and due dates.
Disadvantages of a Debt Management Plan
  • Fees and costs: Some credit counseling agencies charge fees for their services, which can vary depending on the agency and the program. These fees can add to the overall cost of repaying your debts and may impact your monthly payment amount.
  • Impact on credit score: Enrolling in a DMP may have a negative impact on your credit score. While it’s not as damaging as bankruptcy, it can still affect your credit score, which may make it more difficult to obtain credit in the future.
  • Length of program: DMPs are typically structured repayment plans that can last several years, depending on the amount of debt you have and the monthly payment you can afford. This means that it may take some time to fully repay your debts, and you may need to commit to a long-term plan.
  • Limited debt types: DMPs typically only cover unsecured debts, such as credit card debts, personal loans, and medical bills. They may not cover secured debts, such as mortgages or auto loans, or other types of debts like tax debts or student loans.
  • Not all creditors may participate: While many creditors do participate in DMPs, not all of them do. This means that even if you enroll in a DMP, some of your creditors may still pursue collection actions or take legal action against you.