Debt Management Plan (DMP)
What is a Debt Management Plan?
**Debt Management Plan – DMP explained
A Debt management plan (DMP) is an informal agreement between yourself and your creditors, it is not legally binding. Your creditors are not obliged to freeze interest rates, charges or to stop future legal actions. The positive of a DMP is that you do have more flexibility than you would do with an IVA, this could be useful should your financial circumstances change in the future.
DMP versus IVA
Some differences between an IVA and a DMP are as follows-
- IVA’s normally last for 5 years, whereas a DMP will continue until the debt is paid off.
- DMP is an informal agreement, so your creditors can take legal action. An IVA is legally binding.
- In an IVA your creditors should not contact you, in a DMP you can be contacted any point.
- A DMP allows more flexibility than an IVA
DMP- Which debts can be included?
A Debt Management Plan will only cover non-priority debts such as-
- Bank or Building Society
- From Friends or family
- Credit Cards
- Store Cards
Debts not included in debt management plans which are considered priority debts for example -
- Secured debts against your home
- Rent and Mortgages
- National Insurance
- Child Maintenance
- Utility Bills
- Court Fines
Car Leasing in a DMP
You can lease a vehicle from UltraCar if you are in a DMP, our underwriters are looking at affordability and traceability. The underwriters will assess this by looking at your supporting documents, which include 3 month’s worth of bank statements. Unlike being in an IVA where you require your IVA practitioner’s permission to enter into a contract in a DMP you are free to make your own decision.
It is strongly advised that you seek professional advice before entering into either a DMP or an IVA, Ultracar are not qualified debt advisors