Struggling to keep up with multiple unsecured debts? If so, you’re not alone. In a recent ONS survey conducted in May 2024, 54% of respondents believed their living cost had increased compared to just one month ago. The same survey found that a third of individuals in the UK don’t think they’ll be able to save any money in the next 12 months.
With the rising cost of living, many people in the UK struggle to keep up with their finances, feeling overwhelmed by credit card bills, payday loans, and overdrafts. One method of getting back on top and in control of your finances is through taking out a Debt Management Plan (DMP).
A DMP is an informal agreement between you and your creditors to repay your debts at an affordable rate. This can be extremely beneficial if you have multiple debts and struggle to balance them all. However, it’s important to know what type of debts are covered by a DMP.
What does a Debt Management Plan offer?
A DMP provides assistance to UK customers and offers individuals the option to repay their debts at a rate they can afford each month based on a review of personal circumstances that can be cancelled anytime. By taking out a DMP with MoneyPlus, you are guaranteed to be provided with confidential debt advice, and they aim to freeze interest and charges for their customers with 95% successful cases over years, although this isn’t guaranteed.
Success stories of MoneyPlus clients
One customer who found themselves struggling to manage their finances and turned to MoneyPlus for help was Melanie. At the time, Melanie was £22,000 in debt with multiple debts, including credit cards, loans, catalogues and buy-now-pay-later (BNPL) debts.
Through creating a DMP with MoneyPlus, Melanie reduced the overwhelming monthly payments of £739 down to just £133*, which is a massive reduction of £606.
Another MoneyPlus success case is Linda, a self-employed hairdresser who owed over £14k to 8 creditors. Linda’s financial struggles began when her mother fell ill, and she began working reduced hours. Soon after her mother passed away, her daughter also became ill, leaving Linda to take time off from her job to take care of her. Linda’s daughter later had a stroke, leaving Linda to take over care of her grandchildren.
Linda initially sought out financial support from a different DMP provider; however, the provider made her feel judged and made to feel worse about her situation. Still wanting to stay on top of her finances, Linda came to Money Plus Advice.
Since coming to MoneyPlus, Linda has become more relaxed, citing that: “All the staff have been amazing. Every time I call them with a query, I am always provided with brilliant information, and it helps me feel more relaxed to know they are here to help with anything… nothing ever seems like too much trouble.”
Now, Linda completes her annual financial review with the same MoneyPlus Advisor every year. She explained, “I can really be myself with them and talk to them about absolutely anything, and know I am not being judged.”
Susan, a business owner, also sought out support with a DMP. In Susan’s case, she took on her husband’s debts, which led to her owing over £29k to 9 separate creditors. The debt quickly got out of hand. Susan explained how she began to struggle: “The debts seemed manageable at first, but the interest was so big that the amount just wasn’t going down. Then the business wasn’t bringing in much work, and the debts kept going up.”
Before entering into a DMP, the payments Susan made were astronomical and barely covered the interest alone, meaning that there was very little money Susan had left to live on. Now, with the help of the DMP, Susan explains: “I can put debt out of my head most of the time now. When I get the occasional contact from creditors, I know that I can call MoneyPlus, and they will look into it for me straight away.”
How our customers feel about Debt Management Plans
To find out public opinion, MoneyPlus asked some of their customers how they felt about being in a DMP.
When asked, 37.3% stated, “I’m proud of myself but don’t feel comfortable telling people I’m in debt”, compared to 31% who said “I don’t think it’s something to be proud of, and I wouldn’t like people to know I’m in debt”.
Comparatively, 27.3% of respondents said, “I feel proud and I’m happy to tell people about my debt-free journey”.
Debt can sometimes feel shameful, despite there being several causes that might lead to a person falling into debt. The important thing is working to get out of debt and in control of your finances. Becoming free of the financial burden can alleviate the stress and anxiety that can come about because of debt.
Life with a Debt Management Plan
When taking out a DMP, you can manage the debt immediately. Once you have agreed on the plan, you begin making payments right away, allowing you to start paying off the debt once and for all. While on a DMP, it’s still possible for creditors to contact you and about arrears if payments are missed. If the pan is managed by MoneyPlus, you can refer any creditors and redirect them to MoneyPlus.
It’s worth considering before entering a DMP how it will affect your credit score during this time and six years after completion of the plan.
Plan, duration, early repayment and taking on additional credit
The duration of a DMP is dependent on personal circumstances and payments you can afford after a full review of your income and expenditure. With a DMP, you can pay off your debts earlier with increased payment amounts or lump sums.
It’s strongly recommended to avoid taking out further credit, as doing so may result in higher interest rates. However, with regard to taking out a car on finance, some companies may offer finance to those on DMPs, but higher risk is considered.
DMP vs. IVA
Understanding the difference between a DMP and an IVA is essential when you are considering which method of debt solution you want to use. IVAs are legally binding agreements that may write off some debt after keeping up with payments after a set period.
DMPs are informal agreements and are not legally binding. As a consequence, creditors can still take action against you for your debt.
Why you should use MoneyPlus
MoneyPlus offers confidential advice to thousands every year. Most customers can make savings on interest and charges when entering a debt solution with MoneyPlus*** and can access comprehensive support throughout the process.
If you’re struggling with unsecured debt to two or more creditors, find out if a DMP is right for you. We understand the emotional toll debt can take, and our team of experts are here to help.
Contact us today for confidential debt consultation and take the first step towards a brighter financial future.
You can also get free debt advice by visiting MoneyHelper.
*Monthly payments are based on your individual circumstances after a full review of income and expenditure. In a DMP, reducing your payments will extend the amount of time to pay, and monthly Management Fees will be payable.
** For all case studies in this article, we have had customer’s consent.
*** Interest and charges not guaranteed to be frozen, but MoneyPlus succeeds over 95% of the time
