Fees may be charged by a DMP provider, but these will be taken from the normal monthly payment into the plan.
If fees are charged, they would cover the initial set up of the plan, negotiation with creditors, budget analysis, reviews and the management of all creditor communications, payments in and distributions out to creditors.
There are organisations that will provide 'free to client' services. Some of these are funded by creditors and others are charitable organisations.
Debtors will be fully informed by their authorised debt solution providers of any fees that are applicable before signing an agreement.
Important considerations for debtors considering a debt solution:
You give permission to be contacted by an authorised debt management company as you wish to find out if you can apply for a DMP.
We gather some basic information from you including personal details, details of your creditors and your income and expenditures. This will be forwarded to the debt management company so they can contact you and provide you with regulated debt advice.
The debt management company will then call you and explain fully all of the options you have available including the DMP. They will also check through the supporting paperwork you provide proving your situation; this would include documents for proof of income, bank statements and proof of identity.
The debt management company will negotiate with your creditors having created a budget that outlines how much you can pay each month. They will also request that interest and charges be frozen, though it is not guaranteed that creditors will do this.
The debt management company will manage all communications with your creditors as well as your payments in and disbursements out to creditors each month. They will conduct annual reviews to check for changes in your situation and where necessary re-advise you.
You continue to pay a single payment to the debt management company until the debt is paid in full or until your situation changes. You may be contacted by the creditors directly, but you can refer them to the debt management company.
Creditors are often open to settlement offers that allow you to write off some of your debt informally. The debt management company can propose settlements to one or more of your creditors if you have a lump sum.