Can I Have a Savings Account with A DMP? 

If you owe a debt, unless you can somehow manage to go 6 years without paying it and then it is written off, you need to repay it. But what happens when you have multiple debts that you have no chance of keeping up repayments on? None of us aims to get into debt trouble, but the loss of a job or unexpected living costs can mean we do. One option for dealing with this level of debt, is to enter into a scheme such as a Debt Management Plan (MP) to settle all your debts as a single package. But are you still allowed to save money under such a scheme? We take a look at the facts.

Can You Have Any Type of Savings Account With a DMP?

If you do have a savings account when you apply for a DMP, and the management company does not ask you to apportion any of your savings towards repaying your debts, then you can pay in as much as you like to your savings account. As long as you continue to keep up with your monthly repayments to the debt management company handling your DMP.

However, you might find it is better financially to use the money you are saving each month to pay more off your debts. Saving a little is a good thing. But saving a lot, when you are currently facing significant debt problems, might not be such a good idea. You can speak to the debt management company about increasing the rate at which you are repaying your debts if you would rather get them cleared down quicker than save a larger sum of money.

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Why Would a DMP Impact Your Ability To Have a Savings Account?

When you initially set up a DMP with a debt management company, it will want to know all about your current financial situation. And this will include you telling the firm about any savings you may have. The firm may then decide that a part of your savings should be paid off your debts straight away, or that you have enough in savings to see you through a tight financial spot, and don’t need a DMP at all.

What About the Government Help To Save Scheme?

If you are currently using a debt management plan to repay your debts, you might want to start saving as well, but don’t have a lot of money left each month to save. In this scenario, you could potentially take advantage of a Government scheme known as the Help to Save scheme. For every £1 you manage to save under this scheme, the government will add an extra 50p. Not everyone in the UK can open a Help to Save account. Below, we have listed some of the eligibility criteria.

• You are receiving Working Tax Credit.
• You get Child Tax Credit.
• You currently claim Universal Credit and the total income for your entire household was £542.88 or more in the last assessment period.
• If you are overseas and are a crown servant (or your partner).
• If you are overseas and serving in the armed forces (or your partner).

You can save up to a maximum of £50 at a time in the Help to Save account. There is no minimum payment requirement for you to be able to get the government bonus of 50p for every pound saved. Your Help to Save account will only be open for four years. At any time during that four years, you are allowed to withdraw all or part of the balance into your normal bank account. However, you may lose the government bonus to your savings if you withdraw too much, or take money out of the account too frequently.