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Hi All
There is a lot of information on this forum and the internet about DMP's and also people who manage DMP's themselves, but there is nothing that collates a lot of the information together in one place.
As someone who has gone, and going, through the pain of a self managed DMP I thought I would start a series of threads to help anyone considering doing the same.
I am going to look at this subject in the following series of threads:
1) What does starting a Self Managed DMP mean? (this thread)
2) The DMP Toolkit (click here)
3) DMP Getting Started (click here)
4) DMP Dealing with Creditors (click here)
5) DMP Reviewing (click here)
What does a Self Managed DMP mean?
Basically, a self managed DMP is where an individual offers a payment plan to creditors, and manages this plan themselves rather than using the services of a company to do this for them.
This plan is usually a result of falling into financial difficulty resulting in being unable to meet minimum/contractual obligations.
It is important to point out from the outset that embarking on a DMP is a significant financial commitment in itself and should not be undertaken lightly.
A DMP usually lasts many years and so consideration shoud be made as to the long term consequences that this can have on you (as well as the short term consequences).
Don't get me wrong here! I am not trying to put anyone off from starting a DMP (in fact for me it was one the best financial decisions I have made for a long long time) however you just need to be aware of the impact a DMP will have.
A DMP is NOT a short term 'quick fix' or a 'get of debt free card'.
Getting independant impartial financial advice
If you are considering embarking on a self managed DMP then I will make a big assumption that you have already recognised that you are in financial difficulty and are wanting to do something about it.
If you have been advised by a debt management company, or a claims management company, or any other commercial company who charge a fee, or a percentage of the payment you make to them, to start a DMP then I would say STOP until you have done the following:
It would be sensible (if you've not already done so) to take independant (and more importantly) IMPARTIAL advise. Anyone who charges a fee is NOT going to be impartial and, as the majority of these people work on commission, they will be tempted to recommend 'products' that are going to make them the most money.
The best places for independant and impartial advice are:
1) Legalbeagles forum (though other forums are available)
Seriously - there are actually debt counsellors who post on these forums, and there are forum members who will have been through the same thing as you so a massive amount of experience is available to you - for free! More importantly it will be 'warts n all' opinions you will get so you will not have a rose-tinted view of what you are taking on
2) CCCS (http://www.cccs.co.uk/)
Consumer Credit Counselling Service. The most familiar, and consequently busy. Excellent website with online assessment tools (e.g. Debt Remedy) which can give an indication of the best solution for you.
3) National Debt Line (http://www.nationaldebtline.co.uk/)
Free debt telephone service and another great source of information. DO NOT mistake other fee charging companies who have deliberately set themselves up with a similar sounding name to confuse things for you
4) Christians against poverty (http://www.capuk.org/home/index.php)
Another charity offering a free debt counselling service that I have heard excellent reports though no personal experience. Again another excellent website to gather information.
Do I go for a Managed DMP or Self Managed DMP?
So this thread is about self managed DMP's but as part of your research any of these organizations will look at your current financial status and give you the best possible advice on whether a DMP is actually right for you or not.
This is a serious consideration you have to make simply because a DMP is a serious commitment and there may be other solutions that are more suited for your circumstances (IVA, DRO, Bankruptsy etc).
This is important - I have seen far too many claims/debt management companies recommend DMP's when a simple change in income/expenditure and budgeting would have been sufficient to increase surplus income and consequently reduce someones debt.
Simply - I would NEVER pay anyone to manage a DMP. You will ultimately be in debt for longer, and as has been seen with many companies, could end up more in debt than you were before.
So you've been advised that a DMP is the right option for you. You now have two choices on how your DMP will be managed. You can either let one of the organizations above manage your DMP for you, or alternatively you can choose to manage your DMP yourself. There are pros/cons to each a selection of which are below:
Managed DMP Pro's
1) Organizations like CCCS are recognised by creditors and hold a great deal of credibility (this is because they go through a lot of due diligence to ensure that your financial circumstances are accurate) and so, sometimes, are more likely to be co-operative and agree to your DMP
2) They will contact your creditors on your behalf and negotiate with them, removing a lot of the stress
3) They will take a single payment from you and distribute it fairly among your creditors removing the stress of having to manage payments
4) Can be used as a shield, or 'lightening rod' to deflect creditors if they contact you
5) Trained, impartial debt advisors, who can offer advice and support
Managed DMP Con's
1) Will not necessarily offer the best advice in the rare event a creditor takes you to court (certainly cannot offer legal advice)
2) Will insist on ALL your creditors being included on your DMP (this is generally good advice anyway, however there are circumstances where you may not want to include a creditor, or you may want to remove a creditor)
3) Some organizations do not like challenging creditors on the validity of credit agreements removing a potentially useful leverage tool
4) Less feeling of 'financial control'
Self Managed DMP Pro's
1) Complete control of your finances which can be very satisfying
2) You can choose which creditors you will include on your DMP and which ones you will handle differently (if you wish to challenge enforceability or if you wish to stop payments as a creditor refuses to stop interest/charges)
3) You will develop an indepth knowledge of consumer rights and protection which will make you more confident in dealing with creditors and recognise when they are being naughty and slip up and use to your advantage
Self Managed DMP Con's
1) You will have to negotiate with creditors yourself which can be stressful
2) You will have to manage payments to creditors which can be stressful
3) You will have to learn about your consumer rights and protection (though this will become a Pro over time!)
4) Can be time consuming (especially in the early days) to write/post letters etc
DMP's Myths & Truths
So you have decided that you still want to embark on a DMP and you want to manage your DMP yourself. Excellent!
It is important though to be aware of some of the myths that are peddled about DMP's, and also some of the consequences:
MYTH: A DMP is a legally binding contract between creditor and debtor
TRUTH: A DMP although agreed by your creditors is not legally binding at all
MYTH: If I set up a DMP with a company my creditors have to accept it
TRUTH: Creditors are under no obligation to accept a DMP proposal
MYTH: Once on a DMP my creditors will stop calling me.
TRUTH: Once you are on a DMP it is more than likely that your creditors will stop calling. They are under no obligation to do so though (see next)
MYTH: Once on a DMP my creditors will not be able to continue collection activities nor take me to court
TRUTH: Creditors, if they wish, are still able to continue collection activities and can still take you to court. However being on a DMP gives you more leverage against them in terms of harrassment, being unreasonable etc.
MYTH: I have to pay a company to set up a DMP
TRUTH: Anyone can set up a DMP, you can even do it yourself if you wish. There are debt charities that also do this service for FREE. Personally I would never pay a company to do something you can do yourself or get just the same service for FREE!
MYTH: Creditors cannot default you or put anything bad on your credit file when they have agreed to a DMP
TRUTH: Creditors can, and most certainly will, default you should you enter into a DMP and they accept and this will be marked on your credit file
MYTH: Creditors cannot charge interest or add fees to an account subject to a DMP
TRUTH: Creditors are under no obligation to freeze interest or charges although many will if asked to do so
MYTH: The amount paid into a DMP cannot be changed
TRUTH: The whole point of a DMP is that you only pay what you can afford. If your circumstances change either in a positive or negative way you should review your DMP accordingly. This will of course mean your creditors will have to agree the new amount if it reduces. I don't think many creditors would complain if it increased!!
MYTH: I will not be able to get additional credit if on a DMP
TRUTH: It will be highly unlikely that you will be offered credit purely because of the defaults that will be likely put on your credit files. However you should be asking yourself why are you looking to extend your credit even further if you have had to set up a DMP in the first place
MYTH: If I enter into a DMP I will lose my house
TRUTH: Entering into a DMP will do no such thing. Only not paying your mortgage, defaulting on a CCJ etc will put your house at risk
MYTH: DMP's are for losers, failures, you should be ashamed.
TRUTH: DMP's are everyone who are in a particular debt situation and are a solution to that situation. Being on a DMP does not make you a bad person or a failure. Quite the opposite. It shows you are not burying your head in the sand and are looking to deal with your debt.
So if you're still happy that a self managed DMP is the way forward for you the next thing to do is to put together your DMP toolkit >>>>>>>>>>>>>>>>>>>>>>
There is a lot of information on this forum and the internet about DMP's and also people who manage DMP's themselves, but there is nothing that collates a lot of the information together in one place.
As someone who has gone, and going, through the pain of a self managed DMP I thought I would start a series of threads to help anyone considering doing the same.
I am going to look at this subject in the following series of threads:
1) What does starting a Self Managed DMP mean? (this thread)
2) The DMP Toolkit (click here)
3) DMP Getting Started (click here)
4) DMP Dealing with Creditors (click here)
5) DMP Reviewing (click here)
What does a Self Managed DMP mean?
Basically, a self managed DMP is where an individual offers a payment plan to creditors, and manages this plan themselves rather than using the services of a company to do this for them.
This plan is usually a result of falling into financial difficulty resulting in being unable to meet minimum/contractual obligations.
It is important to point out from the outset that embarking on a DMP is a significant financial commitment in itself and should not be undertaken lightly.
A DMP usually lasts many years and so consideration shoud be made as to the long term consequences that this can have on you (as well as the short term consequences).
Don't get me wrong here! I am not trying to put anyone off from starting a DMP (in fact for me it was one the best financial decisions I have made for a long long time) however you just need to be aware of the impact a DMP will have.
A DMP is NOT a short term 'quick fix' or a 'get of debt free card'.
Getting independant impartial financial advice
If you are considering embarking on a self managed DMP then I will make a big assumption that you have already recognised that you are in financial difficulty and are wanting to do something about it.
If you have been advised by a debt management company, or a claims management company, or any other commercial company who charge a fee, or a percentage of the payment you make to them, to start a DMP then I would say STOP until you have done the following:
It would be sensible (if you've not already done so) to take independant (and more importantly) IMPARTIAL advise. Anyone who charges a fee is NOT going to be impartial and, as the majority of these people work on commission, they will be tempted to recommend 'products' that are going to make them the most money.
The best places for independant and impartial advice are:
1) Legalbeagles forum (though other forums are available)
Seriously - there are actually debt counsellors who post on these forums, and there are forum members who will have been through the same thing as you so a massive amount of experience is available to you - for free! More importantly it will be 'warts n all' opinions you will get so you will not have a rose-tinted view of what you are taking on
2) CCCS (http://www.cccs.co.uk/)
Consumer Credit Counselling Service. The most familiar, and consequently busy. Excellent website with online assessment tools (e.g. Debt Remedy) which can give an indication of the best solution for you.
3) National Debt Line (http://www.nationaldebtline.co.uk/)
Free debt telephone service and another great source of information. DO NOT mistake other fee charging companies who have deliberately set themselves up with a similar sounding name to confuse things for you
4) Christians against poverty (http://www.capuk.org/home/index.php)
Another charity offering a free debt counselling service that I have heard excellent reports though no personal experience. Again another excellent website to gather information.
Do I go for a Managed DMP or Self Managed DMP?
So this thread is about self managed DMP's but as part of your research any of these organizations will look at your current financial status and give you the best possible advice on whether a DMP is actually right for you or not.
This is a serious consideration you have to make simply because a DMP is a serious commitment and there may be other solutions that are more suited for your circumstances (IVA, DRO, Bankruptsy etc).
This is important - I have seen far too many claims/debt management companies recommend DMP's when a simple change in income/expenditure and budgeting would have been sufficient to increase surplus income and consequently reduce someones debt.
Simply - I would NEVER pay anyone to manage a DMP. You will ultimately be in debt for longer, and as has been seen with many companies, could end up more in debt than you were before.
So you've been advised that a DMP is the right option for you. You now have two choices on how your DMP will be managed. You can either let one of the organizations above manage your DMP for you, or alternatively you can choose to manage your DMP yourself. There are pros/cons to each a selection of which are below:
Managed DMP Pro's
1) Organizations like CCCS are recognised by creditors and hold a great deal of credibility (this is because they go through a lot of due diligence to ensure that your financial circumstances are accurate) and so, sometimes, are more likely to be co-operative and agree to your DMP
2) They will contact your creditors on your behalf and negotiate with them, removing a lot of the stress
3) They will take a single payment from you and distribute it fairly among your creditors removing the stress of having to manage payments
4) Can be used as a shield, or 'lightening rod' to deflect creditors if they contact you
5) Trained, impartial debt advisors, who can offer advice and support
Managed DMP Con's
1) Will not necessarily offer the best advice in the rare event a creditor takes you to court (certainly cannot offer legal advice)
2) Will insist on ALL your creditors being included on your DMP (this is generally good advice anyway, however there are circumstances where you may not want to include a creditor, or you may want to remove a creditor)
3) Some organizations do not like challenging creditors on the validity of credit agreements removing a potentially useful leverage tool
4) Less feeling of 'financial control'
Self Managed DMP Pro's
1) Complete control of your finances which can be very satisfying
2) You can choose which creditors you will include on your DMP and which ones you will handle differently (if you wish to challenge enforceability or if you wish to stop payments as a creditor refuses to stop interest/charges)
3) You will develop an indepth knowledge of consumer rights and protection which will make you more confident in dealing with creditors and recognise when they are being naughty and slip up and use to your advantage
Self Managed DMP Con's
1) You will have to negotiate with creditors yourself which can be stressful
2) You will have to manage payments to creditors which can be stressful
3) You will have to learn about your consumer rights and protection (though this will become a Pro over time!)
4) Can be time consuming (especially in the early days) to write/post letters etc
DMP's Myths & Truths
So you have decided that you still want to embark on a DMP and you want to manage your DMP yourself. Excellent!
It is important though to be aware of some of the myths that are peddled about DMP's, and also some of the consequences:
MYTH: A DMP is a legally binding contract between creditor and debtor
TRUTH: A DMP although agreed by your creditors is not legally binding at all
MYTH: If I set up a DMP with a company my creditors have to accept it
TRUTH: Creditors are under no obligation to accept a DMP proposal
MYTH: Once on a DMP my creditors will stop calling me.
TRUTH: Once you are on a DMP it is more than likely that your creditors will stop calling. They are under no obligation to do so though (see next)
MYTH: Once on a DMP my creditors will not be able to continue collection activities nor take me to court
TRUTH: Creditors, if they wish, are still able to continue collection activities and can still take you to court. However being on a DMP gives you more leverage against them in terms of harrassment, being unreasonable etc.
MYTH: I have to pay a company to set up a DMP
TRUTH: Anyone can set up a DMP, you can even do it yourself if you wish. There are debt charities that also do this service for FREE. Personally I would never pay a company to do something you can do yourself or get just the same service for FREE!
MYTH: Creditors cannot default you or put anything bad on your credit file when they have agreed to a DMP
TRUTH: Creditors can, and most certainly will, default you should you enter into a DMP and they accept and this will be marked on your credit file
MYTH: Creditors cannot charge interest or add fees to an account subject to a DMP
TRUTH: Creditors are under no obligation to freeze interest or charges although many will if asked to do so
MYTH: The amount paid into a DMP cannot be changed
TRUTH: The whole point of a DMP is that you only pay what you can afford. If your circumstances change either in a positive or negative way you should review your DMP accordingly. This will of course mean your creditors will have to agree the new amount if it reduces. I don't think many creditors would complain if it increased!!
MYTH: I will not be able to get additional credit if on a DMP
TRUTH: It will be highly unlikely that you will be offered credit purely because of the defaults that will be likely put on your credit files. However you should be asking yourself why are you looking to extend your credit even further if you have had to set up a DMP in the first place
MYTH: If I enter into a DMP I will lose my house
TRUTH: Entering into a DMP will do no such thing. Only not paying your mortgage, defaulting on a CCJ etc will put your house at risk
MYTH: DMP's are for losers, failures, you should be ashamed.
TRUTH: DMP's are everyone who are in a particular debt situation and are a solution to that situation. Being on a DMP does not make you a bad person or a failure. Quite the opposite. It shows you are not burying your head in the sand and are looking to deal with your debt.
So if you're still happy that a self managed DMP is the way forward for you the next thing to do is to put together your DMP toolkit >>>>>>>>>>>>>>>>>>>>>>
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