Debt Management FAQ

Debt management plans are a great relief for many who are worried about their debt. When you plan to take up debt management plan through a company or a charity there are several questions that pop up in your mind. Answers of many of these can be found on several company websites as frequently asked questions. Mentioned below are some of the FAQs which might answer your queries. However, if you still have some doubt you can always clarify it through a debt expert.

  • What is debt management plan?
    Debt management plan helps the borrower pay his debt amount through a third party to its creditor. The company negotiates with the creditor for reduced payment and for a longer duration and the borrower has to pay just one single payment to the company who after a small fees, transfers the amount to different creditors.
  • Is DMP or debt management plans a loan?
    No, DMP is not a loan.
  • Will my credit file still be checked?
    No, since Debt Management Plans is not a loan, they will not check the credit file.
  • Will I still be getting phone calls and letters from my creditors for recovery purpose?
    It is most likely that you will be getting them as the creditor is not legally bound for reduced payment. However, the frequency of these may go down as they see that regular payment is being made and that the loan repayment duration is increased.
  • Is there a possibility of making more or less payment?
    Debt management plans are informal negotiations and are not legally obliged. You have the liberty to increase or decrease the payment amount if your circumstances or financial situation changes.
  • Will change of banks required for taking up DMP?
    If one of your crediting banks is your employer then you will need to change your bank to one in which you do not owe any money. This is because it is most likely that the same bank may keep a portion of your wage while crediting your salary.
  • Will I have to cancel my direct debits?
    You should cancel your direct debits to your creditors to prevent them from being paid twice. The normal household bills and insurance should be paid as usual.
  • How do I know that my creditors have been paid?
    The creditors will be sending your statement showing the balance amount of your debt. This will help you know that they have frozen the interest and any kind of charges on your account.