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Debt Management Plan Online – Complete Overview

Debt Management Plan Online

If you’re struggling with unsecured debt, then a debt management plan is definitely an option worth exploring. 

Not only will you be able to afford your debt repayments but all your debts will be consolidated into one monthly payment as well. 

In this post, I’ll look at how you can apply for a debt management plan online and whether it’s a good idea to do so or not. 

How does a Debt Management Plan (DMP) Work? 

A debt management plan is an informal solution which involves an agreement between you and your creditors. 

It involves you making reduced payments every month towards your debts until the entirety of the amount you owe is completely paid off. 

A debt management plan is typically set up by a DMP provider. Once a DMP is set up, your contact with your creditors becomes minimal. Instead, your DMP provider is the one who becomes responsible for dealing with your creditors. 

Your creditors may choose to freeze interest and charges as part of your DMP but they are not obligated to do so. If your creditors don’t freeze interest and charges, then your DMP could last a very long time. 

It’s important to note that priority debts and secured debts are not covered by a DMP so if you have any of those, you’re going to have to make payments towards them separately.

Priority debts need to be dealt with first before you can start making payments towards your DMP. 

Thus, if you have a lot of priority debts, you may find that you may not have a lot of surplus income left to pay towards your DMP. This is something that you’ll need to figure out with your DMP provider beforehand. 

How do I Apply for a DMP Online? 

Firstly, you’re going to have to determine whether a debt management plan is even right for you or not. You can do this by seeking debt advice either from your potential DMP provider or from an independent debt charity such as Stepchange or Payplan.

Not only do these charities provide free advice but they can also set up free debt management plans for you.

They have professionals who will assess your financial situation and give you impartial debt advice about whether or not a debt management plan would be the right option for you or not. 

Once you’ve determined that a DMP is the right debt solution for you, then you’re going to have to calculate how much money comes into your household every month and how much of it goes out. 

You can work out your budget by filling out an Income and Expenditure form which can be found online.

This will be your budget which will be used to determine what your monthly payments will look like. All surplus income will be paid towards your DMP

Your debt management company will also be able to provide suggestions on what unnecessary items you can cut out of your household expenses in order to have more money to pay towards your DMP. Not only will this increase the chances of your creditors accepting your DMP but it will also help you pay off your debts more quickly. 

So, once a budget has been worked out and you know how much you can afford to pay in a monthly payment, a payment offer will be drafted in order to be presented to your creditors. 

A payment offer will be a detailed plan of what your income is, what your monthly expenditure is and based on those two values, what your monthly payments are going to be. 

This payment offer will then be presented to your creditors via an online meeting held by your debt management company. 

In most cases, creditors accept the payment offer and the DMP is put in place. If your creditors reject your payment offer, you can ask them why that is and they may suggest some changes to the terms of your DMP. 

If you can comply with these terms, then your DMP would be accepted. 

Please note that your creditors are under no obligation to state why they rejected the payment offer for your DMP

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How do I Make My Payment Towards My DMP? 

As I mentioned earlier, one of the great aspects of a DMP is that you don’t have to deal with your creditors directly. Your debt management company does that on your behalf. 

This is the case when it comes to payments as well. You will make your monthly payment to your debt management company and they are the ones who will be responsible for distributing the payment among your creditors. 

The portion of the payment that each creditor gets is based on how much you owe that creditor. For example, if you owe 50% of your total unsecured debt to a certain creditor, then that creditor will get 50% of your monthly payment. 

Your monthly payments will continue in this fashion until all of your debts are completely paid off. 


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Will Creditors Contact Me During a DMP? 

As I mentioned earlier, your contact with creditors becomes minimal once a DMP is put into place as your debt management company starts dealing with your creditors. 

That being said, your creditor(s) can still legally call you or write to you while your DMP is in place. 

Your creditor(s) will typically not contact you if you’re keeping up with your monthly payments but if you happen to miss payments or pay them late, then you might get contacted by them. 

Please note that creditors are not allowed to contact you via social media. If you receive messages regarding your debt on any social media platform, it’s important that you inform your debt management company as soon as possible. 

Conclusion 

In today’s day and age, setting up a debt solution such as a DMP on the internet is extremely easy. 

Just make sure to get in touch with a reputable debt management company which can help you throughout the process.

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  • Affordable repayments with an end date in sight
  • Reduce pressure from people you owe money to
  • Stop interest and charges from soaring
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