Am I Suitable for a DMP?

A DMP offers a sensible way for many people to manage their numerous debts by combining them all into one monthly payment at the same level of interest, but it is not the solution for everyone. There may be a more effective programme to help you to sort out your debt problems, or indeed you may not meet the requirements stipulated for entering into a DMP.

If you are thinking about entering into a DMP, the first thing to do is to work out exactly how much you will be able to put aside each month to pay off your debts. This is deduced by subtracting your total essential monthly expenses, such as food and rent, from your total monthly income. The money that you have left over is the money that you can use to pay back your debts.

This process can either be done by yourself or with the help of a debt charity such as the Consumer Credit Counselling Service (CCCS), but whichever way you go about it you will have to come up with a figure and see if it is enough to make reasonable monthly payments. If you find that you are able to make a regular payment with the money you have left over then a DMP is probably a good option. If not, then you may have to look into alternative solutions to your debt problems.

For those that can make a regular monthly payment, the DMP offers a great way to become debt free within a set period of time. However, as a rule a DMP is generally only considered a good solution for people who find themselves in short-term financial difficulties. For example, if you are currently facing difficulties but are confident that your situation is likely to improve in the near future, then the DMP should be strongly considered.

If you do not think that your situation is likely to improve and that there is a chance you will not be able to make your monthly payments in the future, then it is probably best to consider an alternative debt management solution. The most serious consequence of failing to meet your payments could see you declared bankrupt, so only enter into a DMP if you are sure it is right for you.

There are also many requirements for people entering into a DMP that will have to be met. For example, many debt agencies and charities will stipulate that you must owe at least £8,000 in total, and that this must be owed to at least three different companies in order for you to be considered for a DMP.

On top of that, the types of debt that you have will be relevant in whether you can enter into a DMP. You should be aware that DMPs will not cover secured loans, such as loans taken out against your house, as well as certain other loans including student loans and council tax arrears.