It is an alternative to declaring bankruptcy and will enable an independent party to negotiate with your debtors to work out a plan whereby you can pay all of them back.
It means that you won’t get final demands through your door or bailiffs knocking on your door if you can keep up with the new manageable payments. Your independent party will work out what you can afford to pay each month to pay off your debts based on your income and outgoings.
Increasingly there’s an attitude that bankruptcy is just an inconvenience, and can even be a solution in itself, allowing you to stop worrying about the problem, but nothing could be further from the truth. Declaring bankruptcy should be an absolute last resort, and a debt management plan (DMP) is almost always preferable, even though it can leave you short of cash for a period of time – if you’re in a desperate situation you should be used to that though.
Some people worry that their home may be at risk with a DMP. As always it is best to go to a professional company like Payplan for advice on how to get out of debt, but here are the facts about debt management plans:
- Your home IS at risk if you declare bankruptcy.
- The only way your house would be at risk would be if you failed to keep up with your payment plan – which is unlikely as you will have been assessed to ensure you can make those monthly payments.
- Even if you miss a few payments creditors would still have to follow a set of steps to take your home; issue a default notice against your account, obtain a county court judgement if you continued to miss payments and then they would have to apply for a charging order against your property.
It is clear that if you are actively working towards paying off your debt that there is only a very low risk associated with a DMP, so if you’re looking for a way to clear your debts this could be the answer.