It can sometimes be quite hard to determine just which debt solution would be most suitable for your particular financial situation. 

This is where example cases come in handy. Looking at examples of debt management plans can help you get an idea if it could be suitable for you or not. 

In this post, I’ll be discussing many different examples of DMPs and how they helped their applicants pay off their debts at an affordable rate. 

Examples 

I’ve rounded up many different examples of individuals that opted for a debt management plan and summarised what their payment plans looked like prior to and after getting the DMP

These are given below: 

Case 1 

Mr T had some problems with his vehicle. Not only had the vehicle been acquired on a finance agreement but the repairs required to fix the vehicle were also very expensive (It summed up to £15,000). Mr T was unable to pay all of that money off at once. 

His creditors proceeded to pursue court action against him and Mr T had to sit through court proceedings in order to try and settle the dispute. During his time spent in court, a lot of debt had accumulated. 

Mr T was paying about £950 per month towards his debt to his creditors. He reached a point where he could not maintain these monthly payments. That’s when he decided to enter into a debt management plan. He went to a DMP Provider for debt advice and they were able to draft an affordable payment plan for him. 

The DMP provider took his income, expenditure and debts into account and determined that he could realistically afford £150 per month after his essential living costs were taken into account. 

Details of his income and essential costs were sent to his creditors along with the debt management plan. 

The debt management plan was accepted and Mr T is now paying back his debts at a rate of £150 per month as part of his DMP. A rate which got reduced from £950 per month. 

repayment plan case examples

Case 2 

Mr S is self-employed. During the past few years, his business was struggling to bring in sizable revenue. Due to this, he made use of credit cards to supplement his income and address his essential living costs. 

In more recent times, his business started gaining traction but he had accrued debts that total up to £30,000. These became quite difficult to pay back. His monthly payments became so unaffordable that not only were they decreasing the quality of his personal life but they were also threatening his ability to run his business effectively. 

Mr S had monthly payments of £657 which were simply not affordable for him. He decided to opt for a debt management plan. His DMP firm looked at his finances including his income (all sources of it), his essential living costs and his debts and was able to determine that he could realistically afford £120 in monthly payments. 

A proposal was written which included all the details regarding Mr S’s finances. Alongside this information, the debt management plan was detailed which had information about what Mr S’s monthly payments would look like under a DMP

Since the proposal had complete information about Mr S’s finances, creditors were able to assess for themselves that £120 was indeed the amount that Mr S could afford to pay as a monthly payment. 

As a result, the debt management plan was accepted by the creditors and Mr S is now making repayments at an affordable rate of £120 as opposed to the £657 he was paying to his creditors without a DMP

Case 3 

Mr M works as an engineer and is earning £20,000 annually. He lives in a property that has a mortgage and he is the sole owner of the mortgage and thus, the property. 

For the previous seven years, Mr M was making his monthly mortgage repayments on time and in full. However, along with that, he was taking out short term loans to fund different purchases. While these were not exactly luxury purchases, Mr M was simply living a lifestyle that he could not afford. 

Over time, his debt accrued up to about £27,000. Bear in mind that these debts were completely separate from his mortgage loan. 

For quite a long time, his repayments towards his debts as well as his mortgage were manageable for him. This is because he was bringing in a consistent stream of income as well as earning bonuses when working overtime. 

After a few months of consistently making repayments towards his mortgage and other debts, he was met with a leg injury which forced him to take time off work for two months. This caused him to fall behind on his repayments drastically.

Once he returned to work, he tried to catch up on his debts as well as mortgage payments but found that in order to do so, he would need to pay about £980 every month. This was an amount he simply could not afford. 

As time went by, he tried his best to pay back his arrears but to no avail. The payments were simply not affordable to him. 

In addition to this, creditors were increasing his interest and charges which meant that his debts were increasing. Mr M felt overwhelmed and it seemed like he would never be able to get himself out of the debts that he owed. 

He met with a debt advisor who reviewed his finances and determined that out of all the debt solutions available to him in the UK, a debt management plan would be most suitable for him.

Mr M completed his budget and was able to write a payment plan which addressed his priority debts first by taking the payment for those straight from his wages. After his priority debts were addressed, the DMP was able to get his payments reduced from £980 per month to £400 per month. 

His DMP firm approached his creditors and was able to negotiate the terms of his DMP with them. 

Most of his creditors also agreed to freeze interest and charges on his debts. Creditors freezing interest and charges meant that the total amount of money Mr M owed would not increase and eventually, he would become debt-free. 

Mr M now makes repayments of £400 per month and if he sticks to them, he’ll be able to pay off his debts in full in just about six years. 

Conclusion 

Debt management plans can be a great way of paying off your debts but it’s often hard to tell whether they’d be the right solution for your financial situation or not. 

Be sure to get free debt advice from an agency authorised and regulated by the Financial Conduct Authority (FCA) before you opt for any one solution. Debt charities that I recommend include National Debtline and Stepchange.

I hope you found this information useful and now have a better understanding of how to take care of your debt problems. Let me know if you have any further questions. 

About the author

Scott Nelson

Scott Nelson is a financial services expert, with over 10 years’ experience in the industry, including 6 years in FCA regulated companies. Read more
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