DMP or bankruptcy? Ways To Deal With Debts. StepChange (2024)

FAQs

Why would a DMP be rejected? ›

Sometimes a creditor will refuse to deal with a DMP provider. This could be because the creditor doesn't want to accept the reduced payments or sometimes it could be because they've objected to you using a fee-charging provider, which would mean there's less money to pay the debts you have with them.

StepChange was incredibly helpful, in particular assisting me put things into perspective (within my own mind mostly). I now have a debt repayment plan in place and am slowly working towards being debt free - forever. I can't thank StepChange enough for the help and advice they gave me."

Creditors are likely to accept a DMP if they see it as the easiest way to recover their money. Remember that creditors can't refuse to take reduced payments. You can continue to make payments, which can help keep lenders onside and give you some breathing space while you negotiate a solution.

A debt management plan (DMP) isn't legally binding, so you can cancel it if you feel it isn't working for you. However, you may not get a refund of your fees and you'll need to make sure you have another way of dealing with your debts.

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.

I just want to make one payment to my debts each month. A DMP may be a good idea if you are struggling with monthly debt payments. Even if you do not think you are in trouble yet.

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.

In an IVA, your creditors are legally protected from taking any further action against you, such as chasing letters or phone calls. A DMP does not offer this guarantee and your creditors can still take action.

There's no maximum or minimum debt level needed to enter a DMP, but there are some things to consider before applying. A DMP is good for those who are struggling to keep up with their debt repayments, but who can afford to consistently pay smaller amounts over a longer period of time.

How to get out of debt with no money and bad credit? ›

In general, most debt will fall off of your credit report after seven years, but some types of debt can stay for up to 10 years or even indefinitely. Certain types of debt or derogatory marks, such as tax liens and paid medical debt collections, will not typically show up on your credit report.

Your debt ratio is too high. You have a bad payment history. You have an unstable job or low income. You can't provide collateral.

If your debt consolidation loan was denied because you have too much debt or not enough income, create a realistic budget with a detailed plan for how you'll use your income to help meet your goals.

Unlike debt consolidation programs that require you to take out a new loan to pay off what you owe, our debt management plan does not involve taking on any new debt. You'll learn a lot about managing money.

What counts as a successful DMP? You're making a success of your DMP when: You're making realistic payments on time each month. It runs smoothly alongside your other expenses, so you always have enough for priority bills and living costs.