If someone is having difficulty in making payments, an option could be a Debt Management Plan. A debt management plan (DMP) is a correspondence between the person and his creditor (debt management companies or organizations). It usually refers to negotiating reduced interest rates or payments on one’s account. The reduced payment amount makes payments more manageable and allows to pay down the owed debt continuously.
Debt Management Objectives
The objectives of debt management are:
- To minimize borrowing costs to keep risks at an acceptable level
- To support the development and functioning of the domestic financial markets
Debt Management Process
There are many debt management companies available that help to negotiate with all creditors in the meantime and create a payment plan whereas, a debtor makes one monthly payment to the debt management company.
The company then makes individual payments to each of the creditors on debtor’s place. Debt management companies usually charge a fee for their service.
Debt Management Types
There are three basic debt management types
Debt Negotiation
Debtor making an agreement with their creditors without any help of a debt management company is debt negotiation.
Debt Consolidation
Debt management company assists you to get your debt under control. In a debt consolidation, the debtor makes one payment each month to the company and company then makes payments to each creditor.
Debt Consolidation Loans
Debt Consolidation Loans involves debtor taking out one large loan to pay off all smaller debts. One disadvantage of debt consolidation loans is that debtor has to pay interest on that loan which will add up over time.
A debt management plan (DMP) is NOT a loan. It is a part of the debt consolidation plans packages that are designed to help people recover standard of their finances while reducing non-guaranteed debts.
Debt Management Advantages and Disadvantages
There are a few following advantages as well as disadvantages of Debt Management.
Advantages
- The debtor can use this even with the bad financial condition
- Reduced or eliminated interest rates from the debts
- Making every day and punctual payments can modify the credit report and credit score over time
- Getting out of debt
- No penalization and collections of interest
Disadvantages
- Account freezing which a debtor include in the debt management plan
- No application for new credit card till the clearance of debt
Debt Management Plan in the UK
In the United Kingdom (UK), residents can also apply for an Individual Voluntary Arrangement along with Debt management plans, which can give the debtor some discount on their debt.
Top 11 Debt Management Companies in the UK
Debt management is actually monitoring and managing the risk factors and one of the most challenging tasks about financial problems is finding the correct place. The abundance of Debt Management Companies (UK) are offering free assistance, so it is a difficult task to choose the right one.
Top 11 debt management companies in the UK, performing their functions and services, are going to be discussed here comparatively.
| No. |
Company Name |
Offers |
DMP Cost |
Reviews |
| 1 |
Gregory Pennington |
Debt management | 18.5% of monthly payment | Excellent Customer Service |
| Quick response | ||||
| Individual voluntary arrangements (IVA), | ||||
| Bankruptcy, debt advice | ||||
| 2 |
Debt Advisory Line |
Debt management, | varies | Brilliant professional advice |
| Courteous | ||||
| Individual voluntary arrangements (IVA), | Attentive | |||
| debt advice. | ||||
| 3 |
Peace Of Mind Group |
Pay off debts, loan, trust deed, Bankruptcy, debt collection, consolidation loan, debt in the bank. | 17.5% of monthly payment | Excellent Customer Service |
| Quick response | ||||
| 4 |
Carrington Dean Group |
Individual voluntary arrangements (IVA), debt management scheme, trust deeds, bankruptcy, debt advice, debt arrangement scheme. | 15% of monthly payment | Excellent Customer Service |
| Quick response | ||||
| 5 |
National Debt Help |
Individual voluntary arrangements (IVA), debt management, bankruptcy, debt advice | Free | Excellent Service |
| Quick response | ||||
| Less stressful | ||||
| 6 |
Step Change |
Individual voluntary arrangements (IVA), debt management, bankruptcy, debt advice and trust deeds | free | Excellent Service |
| Quick response | ||||
| Less stressful | ||||
| 7 |
Independent Debt Management (IDM) |
Personal finance, business debt management, debt advice, equity release | 25% of total amount | Good service |
| Good response | ||||
| Costly | ||||
| 8 |
ACME Credit Consultants Ltd |
Bankruptcy, Individual voluntary arrangements (IVA), debt management plans, personal finance and debt advice | 20% of monthly payment | Good service |
| Quick response | ||||
| Costly | ||||
| 9 |
Pay Plan Live again |
Individual voluntary arrangements (IVA), self-employed Individual voluntary arrangements (IVA), debt management plan, trust deeds, debt relief orders, bankruptcy etc. | free | Excellent Service |
| Quick response | ||||
| Less stressful | ||||
| Free of cost | ||||
| 10 |
Harrington Brooks |
Individual voluntary arrangements (IVA), debt management plan, bankruptcy, debt relief orders, debt consolidation etc. | ₤ 80 monthly | Excellent Service |
| Quick response | ||||
| 11 |
Money plus |
Individual voluntary arrangements (IVA), debt management plan, bankruptcy, debt relief orders, debt consolidation etc. | 49% of monthly payment | Excellent Service |
| Quick response | ||||
| Very costly | ||||
Conclusions
A debt management plan (DMP) is a correspondence between the person and his creditor. Many debt management companies help to negotiate with all creditors in the meantime and create a payment plan whereas, a debtor makes one monthly payment to the debt management company.
There are numerous debt management companies or organizations addressable to assist people having debts in the UK. All of the top debt management companies of the UK mentioned above have humongous information available regarding debt management plans or many other debt management schemes with either free or costly help available. One can easily compare and take help in choosing DMP with respect to the companies.