Free DMP – Do It Yourself and Save Money
Is a free DMP possible? Find out here!
A Debt Management Plan (DMP) is a non-legally-binding debt solution where the debtor agrees to make monthly repayments until their debt is paid off. It is one of the simplest and most common types of debt solution used.
Many people pay for a service – sometimes with ongoing monthly fees – from a debt management company to get them a DMP. But this is not the only way to get a DMP.
Is It Possible to Get a Free DMP?
Yes, you don’t need to use a debt management company to get a free DMP. By calling your creditor yourself, you can agree a repayment schedule directly and enter into a DMP without the help of other companies or services.
You might even be able to get a free DMP by using the services of a debt charity. Some charities like Step Change UK offer a free Debt Management Plan service where they will try to get a DMP for you without charge.
Why Is It Possible to Get a Free DMP Yourself?
You might be confused why it is possible to get a DMP yourself when other companies are charging for this service. Many debt solution services need to be arranged and monitored by qualified professionals known as insolvency practitioners. These types of services, for example an IVA, are formal solutions and are legally binding.
A Debt Management Plan on the other hand is an informal solution with no legal weight. Therefore, you don’t need to use or be an insolvency practitioner to get one.
Are Informal Solutions Like DMPs Not As Good?
Informal solutions may get you out of debt just as quick as a formal solution. Many debtors may even be more suitable to an informal DMP agreement over formal solutions.
The only issue with a DMP is that it does not carry any legal obligations, meaning your creditors can change their mind on the agreement at any point (so could you although that probably won’t help the situation!) and ask for full payment again.
Although they can do this, it is not likely as the creditor knows they will get their money eventually by sticking with the DMP agreement.
Why People Don’t Try to Get a Free DMP?
Lots of people in debt don’t try to get a free DMP themselves by calling their creditor because they are not aware that it is possible. If they knew they could get a free DMP themselves they might not use a debt management service to do it for them.
However, some people are aware that they might be able to get a free DMP directly and still chose to use paid-for services. The reason for this might be one or a combination of the following reasons:
- Fear of negotiating
- Fear of speaking with creditors
- Lack of confidence
- Hope that the company can get a better deal
- Hope that the company can freeze any debt interest building up
Is Getting a Free DMP Yourself Difficult?
When you call your creditor and let them know you want to agree to pay back the debt, there is a good chance that they will listen to your proposal. Most creditors understand that people end up in difficult circumstances and need an alternative solution to pay back their debt. After all, if they agree they will get the money back they are owed.
If you are not anxious about speaking with your creditors and negotiating, it is not so difficult to get a free DMP over the phone.
Before you call you must work out your disposable income so you only commit to repayments you can afford. Some creditors might want this type of information before agreeing to a DMP with you. Free debt advice with charities can help you work out your disposable income accurately.
How Much Do Debt Management Companies Charge for DMPs?
The UK has hundreds of debt management companies and businesses offering to help secure you a DMP.
They all charge different fees with some charging one-off fees and others charging ongoing monthly DMP fees. You can expect to pay between £20-£100 per month for these commercial services. Some DMP fees will vary based on the amount of debt you owe.
Is a Free DMP Always Better?
With that in mind, is it always better to get a free DMP yourself?
It would appear that way considering you could be spending hundreds of pounds on fees every few months. However, if you can find an affordable DMP with a debt management company that does good work, their commercial service may be more advantageous than your own free DMP.
This is because some are good negotiators and can get you cheaper repayments or get the interest and late fees frozen.
Sometimes your own free DMP will be better and other times paid-for services will be better. You have to do your research.
Before You try for a Free DMP…
But before you try to get a DMP yourself or with a debt management company, there is something else we recommend doing.
Search for free debt advice from reputable sources to work out which debt solution is best for you.
Sometimes a DMP may not be the best debt solution for your circumstances and you could be financially better off in the long term by using another solution, such as:
It’s horses for courses in the debt industry too!
Where Can I Find Out More About DMPs?
Learn much more about Debt Management Plans at Money Nerd. We created this free DMP guide to answer the most pressing questions.
And don’t forget to check out our blog for additional helpful information for debtors!