Should I include all my debts in a Debt Management Plan?
When entering a Debt Management Plan (DMP), you don’t have to include all your debts. However, if you were to enter a DMP with PayPlan then we would advise you to include all your debts.
If you decide to leave a debt out, you may find that the creditors that have been included will reject the DMP.
This could happen when the creditors feel that your offer of reduced payment is unfair as you’re not treating all your creditors (those you owe money to) in the same way.
You don’t have tell other creditors that you’re leaving a certain debt out of your DMP, but it does mean that you won’t be able to include that debt in your expenditure. This could lead to your DMP not being accepted, meaning creditors can continue to add their interest and charges.
What about joint debts?
If it’s only you that starts the DMP, the person you have the joint debt with will still be liable for the debt. To combat this, you can start a joint DMP where you include both of your debts and base the monthly payments on the disposable income of the household.
If you have joint debts and the person you share the debt with isn’t aware that you are struggling with your finances, we’d suggest speaking to them about your debts. You’ll need to come to an arrangement on how to deal with the debt, as the joint owner will be contacted to make full payments.
Which debts are excluded from a DMP?
The main debts left out of DMPs tend to be secured and priority debts, like mortgages or car finance agreements, which will need to be paid as usual. If you’re struggling to pay any of your priority debts, you’ll need to speak to your suppliers.
HMRC debts or tax arrears will also be under separate arrangements organised by HMRC, as they’ll need to be repaid within 12-18 months.
Can I continue to use credit during a DMP?
Things like utility bills and your existing mobile phone contract can continue to be paid on a monthly basis during a DMP.
It’s unlikely that you’ll be able to take out any other form of credit as the supplier will complete a credit check on you and likely refuse your application.
What if I’m self-employed?
If you run your own business, it’s understandable that you may need lines of credit to continue operating. You aren’t required to include business credit cards or key accounts in your DMP if you require these lines of credit to keep your business running.
FAQs
Certain Debts Are Ineligible
What debts Cannot be included in a DMP? ›
They're called priority debts because the consequences of not paying them can be more serious than for other debts. You usually can't include these debts in a DMP - check with the DMP provider. You'll need to choose another debt solution for your priority debts if you can't put them in a DMP.
What type of debts Cannot be consolidated in a debt management plan? ›
Secured debts are generally not allowed on DMPs, meaning you will still need to manage your mortgage and car payments separately. Student loans cannot be included on your DMP at this time.
Do I have to put all my debts into a debt management plan? ›
Remember that a DMP won't pay off all your debts. Your priority debts, such as mortgage arrears or court fines, can't go into a DMP. You need to make arrangements to pay these debts first and still need to deal with these creditors yourself.
What are 2 things that debt collectors are not allowed to do? ›
The Fair Debt Collection Practices Act says debt collectors can't harass, oppress, or abuse you or anyone else they contact. For example, debt collectors can't: Make repeated phone calls that are intended to annoy, abuse, or harass you or any person answering the phone. Use obscene or profane language.
What type of debt Cannot be erased? ›
Filing for Chapter 7 bankruptcy eliminates credit card debt, medical bills and unsecured loans; however, there are some debts that cannot be discharged. Those debts include child support, spousal support obligations, student loans, judgments for damages resulting from drunk driving accidents, and most unpaid taxes.
Can bailiffs come if you have a debt management plan? ›
In fact, being proactive and working to set up a DMP as soon as you start to struggle with your debt repayments could stop bailiffs being appointed at all, especially if both parties have agreed a repayment plan before court action is taken and a County Court Judgement (CCJ) is issued.
What is not eligible for debt consolidation? ›
Insufficient Income or High Debt Ratio
One of the main reasons why you may not be eligible for a debt consolidation loan is if you have an insufficient income or a high debt ratio. In Singapore, lenders typically require that your debt consolidation loan amount is at least 12 times your monthly income.
Can I keep my credit cards on a DMP? ›
Creditors typically require that credit card(s) included in a DMP be closed to prevent additional charges. You may be allowed to keep one card open and off your plan for emergency purposes.
Can I be denied debt consolidation? ›
The top reason banks and other lenders deny a consolidation loan application is the applicant's poor credit score. Your credit score is a number that represents how risky you are to the lender.
In many cases, you can keep one card out of the program for emergencies or travel. You also generally do not need to include business credit cards. For anyone that's married, your spouse only needs to enroll with you in the program if you hold all your credit cards jointly.
Is a DMP or IVA better? ›
Generally, an IVA will be better suited to you if your financial situation isn't likely to improve and you want a debt solution with a clear end date. A DMP, however, will be a better option if you have multiple debts and your financial situation is expected to improve shortly.
Does a DMP hurt your credit? ›
The idea of having a notation on your credit history may initially send up red flags. But while a debt management plan does affect your credit history, it does not have a lasting negative effect on your credit score. When you agree to close all of your credit accounts, your credit history stops.
What is the 777 rule with debt collectors? ›
One of the most rigorous rules in their favor is the 7-in-7 rule. This rule states that a creditor must not contact the person who owes them money more than seven times within a 7-day period. Also, they must not contact the individual within seven days after engaging in a phone conversation about a particular debt.
What is the 11 word phrase to stop debt collectors? ›
If you are struggling with debt and debt collectors, Farmer & Morris Law, PLLC can help. As soon as you use the 11-word phrase “please cease and desist all calls and contact with me immediately” to stop the harassment, call us for a free consultation about what you can do to resolve your debt problems for good.
What's the worst a debt collector can do? ›
Debt collectors are limited on when they can call you — typically, between 8 a.m. and 9 p.m. They are not allowed to call you at work. They can't lie or harass you. Debt collectors can't make you pay more than you owe or threaten you with arrest, jail time, property liens or wage garnishment if you don't pay.
What is not included in debt management ratio? ›
The debt ratio does not take a company's profitability into account. If its assets provide large earnings, a highly leveraged corporation may have a low debt ratio, making it less hazardous. Contrarily, if the company's assets yield low returns, a low debt ratio does not automatically translate into profitability.
What debts are not included in a debt relief order? ›
Debts not covered by a DRO
magistrates court fines and confiscation orders relating to criminal activity. child support and maintenance. student loans. social fund loans.
Which debts are not included in the debt service ratio? ›
The following payments should not be included: Monthly utilities, like water, garbage, electricity or gas bills. Car Insurance expenses. Cable bills.
Which of the following types of debts is not considered dischargeable? ›
The most common types of nondischargeable debts are certain types of tax claims, debts not set forth by the debtor on the lists and schedules the debtor must file with the court, debts for spousal or child support or alimony, debts for willful and malicious injuries to person or property, debts to governmental units ...
