What is a Debt Management Plan?

A Debt Management Plan is an effective debt solution that helps you to consolidate debt repayments into one affordable monthly payment.

If you’re having difficulty repaying your debts, a Debt Management Plan could help you to clear debts at a rate that’s more manageable within your budget. This could help you to avoid falling behind on other bills like rent / mortgage, utility bills and council tax.

In short, a Debt Management Plan could help relieve the burden of managing multiple debts by combining repayments into a simple monthly payment plan.

What we will do for you…

If you’re interested in finding out more about a Debt Management Plan, call one of our friendly experts for information and find out how we could help you.

We can complete a financial review for you, and if you qualify, we can discuss how to move forward from there.

At Baines & Ernst we negotiate directly with creditors (the companies you owe money to), request that they freeze interest and charges and distribute payment to them every month.

Key Information and Fees – Debt Management Plan (DMP)

At Baines and Ernst we’re committed to providing the highest standards of customer service at competitive rates. For information on our fees for our full range of services, please click here.

When you first apply for a Debt Management Plan (DMP), you will pay an initial fee to us for negotiating with your creditors and for managing the distribution of your monthly payments. This initial fee is paid before any payments are paid to your creditors, therefore you may fall behind (or further behind) with your creditors. This stage of the DMP will result in you not making the contractual repayments on your unsecured debts and will affect your credit rating in the medium to long term; however you can continue to make token payments to you creditors during this period if you wish.

However, your credit rating may already be affected if you have arrears or a history of missed or late payments. A record of your agreement with us will be held on your credit file for up to six years after you complete the plan.

Please note that due to lower repayments under the DMP, unless your creditors agree to freeze or reduce interest and other charges (which they are not obliged to do), then there will be an increase in the total amount of debt to be repaid and the time taken to pay off the debts.

Although you may become debt free at the end of the DMP period, if a Default Notice has been issued, it will still appear on your credit record for 6 years.

In line with the Consumer Protection (Distance Selling) Regulations 2000, you may cancel the DMP at any time. You will also have a cooling off period of seven working days from when the forms are signed and returned to us, during which you may cancel in writing and receive a refund of the initial fee paid to us.

You must make sure that you continue to make your payments in full towards any mortgage, other secured loans, including utility bills and council tax payments. Baines and Ernst will take these payments into account when we work out your disposable income in the DMP.

You can also view a free publication from The Insolvency Service ‘In Debt? Dealing With Your Creditors’ which provides an overview of some of the debt solutions that may be available to you.

Alternatively, if you’re in Northern Ireland, you could look at the Department of Enterprise, Trade and Investments ‘In debt? Dealing with Creditors’ guide, here. Residents of Scotland can also look at the Scottish Governments ‘Debt Advice and Information Package’ guide here.