What Happens when Debt Management Plan (DMP) Ends?

Are you coming to the end of your Debt Management Plan (DMP) and wondering what happens next? You’re not alone. Each month, over 170,000 people visit our website seeking advice on debt solutions.

We understand that the end of a DMP can bring a mix of relief and worry, and we’re here to help put your mind at ease.

In this article, we’ll cover:

•  What a DMP is and how it works.
•  Steps to take if you miss a payment.
•  How to know when you need to update the terms of your plan.
•  The process of paying off a DMP early and potentially writing off some debt.
•  What life looks like after a DMP.

Our team is made up of people who have experienced debt issues, just like you. We understand your worries and concerns, and we’re committed to helping you explore what happens when a Debt Management Plan ends.

What occurs once the debt solution is completed?

When a DMP is completed, you are no longer required to keep paying your debt back in the form of monthly payments. Your DMP payments will come to an expiration. 

Depending on the terms of the DMP, your debt may have been paid in full or some portion of it may still be unpaid. If your situation is the latter instead of the former, you’ll be happy to know that all existing debt you owe is written off once your payments are over and the plan expires.

You’ll want to get to improving your credit score and rebuilding your credit file as soon as possible.

Since your credit report is largely dependent on the payments you were making on the DMP, now you’ll be able to get to improving it.

Also, as general advice, you should be aware that even if you pay your DMPs off before their expiration date, they’ll still be listed on your credit report. 

So even if you complete the DMP by completing your payments before the specified duration, it will still show up in your credit history till it expires.

This can be a nuisance, since lenders may want to look at your credit report and credit rating before they decide to loan you. If DMPs and other debt solutions are listed in your credit history, they may not be as willing to loan to you.

Paying off Early

This section addresses how and when you can pay a debt management plan off early.

In general, you are allowed to increase the payments you make on the arrangement if you can afford to do so.

Here’s two of the most common situations where you may want to increase your payments and try to pay your arrangement off before it expires in six years.

• Your income streams have increased

If this happens, you’ll be expected to contribute more towards your monthly payments.

When you enjoy a spontaneous rise in your income levels, you could be expected to contribute more towards your plan each month than you currently do.

• A big sum of money

If you suddenly happen upon a very large sum of money during your trust deed, you could be able to pay your debts back as a big sum.

If you’re able to pay your debt back in full, you definitely should. It will only be written off if you can’t afford to pay it for as long as the length of a debt management plan. It’ll also help your credit rating if you pay it off as soon as possible.

How to Cancel a Plan?

If you’re looking to cancel your DMPs, you’ll be happy to learn that it’s entirely possible.

In order to cancel your DMP, you need to contact your DMP provider and inform them of your desire to cancel the DMP.

You can ask your DMP provider to cancel your Debt Management Plan using our free letter template.

When your provider agrees with your decision, they will inform your creditor of your decision to cancel the arrangement. 

What is a Full and Final settlement offer?

A full and final settlement is one where your creditor agrees to take less than the entire loan amount that is owed to them.

Instead of you having to keep making reduced payments in an attempt to deal with your personal loan or credit card loan, you can have your lenders agree to accept a partial payment.

Then, you’ll be having them agree that they won’t be taking any action to recover whatever remains of the initially agreed-upon amount.

A full and final settlement can be very effective when you’re struggling to pay the full amount towards your plan.

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Life After a DMP

It is possible that your credit rating may have gone down while you were in the arrangement, over a period of six years.

Here’s what life after a DMP would look like: even though the arrangement itself would not appear on your credit file, any late payments or missed payments may have been duly noted by lenders.

Details of your arrangement will stay on your credit file and keep affecting your credit score for six years after the date it came into existence. Your credit file can suffer as a result.

Also, the information may have reached credit reference agencies, which can make it harder for you to find suitable lenders. Your credit file and credit score matter a lot in this regard.

Life after a debt management plan can be rather refreshing, though. You no longer have an active debt solution looming over your head, especially if it’s a debt solution you were struggling with.

You no longer have to keep up with payment after payment. You can get credit cards and engage in other financial matters with less pressure than before. You can build connections with people and revive your financial image in the eyes of several people in the business world.

All in all, there’s a lot in store for you if you do it right.

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Wrapping it Up

I hope this article helped you get an idea of what a debt free life, one that starts when your debt management plan completes, looks like. 

You will need to make a few lifestyle changes to adapt, but I’m confident you’ll find peace and contentment in your newfound circumstances, such as how you should deal with your lenders and regularly check your credit history.

If you need any more debt advice, feel free to reach out.