DMPs

[janderson]

We are in the process of setting up our DMP and the first payment will be made later this month, does anyone out there have experience of DMPs and if so is it usual for creditors to freeze interest on the debt. Also what experience good or bad do you have of DMPs.



Thanks


John

[Lisa2009]

A DMP is a good solution if debts are not too high but there is no legal protection with it, creditors are still free to add interest.

[size5]

Mrs Skint is correct in her statement that there is no legal protection with it, but in reality if a DMP is the right way forward for you then although it is highly likely that you will get more hassle in the initial short term stages and it may take longer re freezing of interest, then as long as it is done properly, fairly and you have a reputable firm doing the work for you, it is my experience that in the long run there is very rarely a problem with them.

There are some very reputable companies that provide DMP's as well as IVA's etc, so as long as it is done right and you are happy with the solution provided for you then you will almost certainly be fine. The real danger with DMP's is the drop off rate in the first 2 or 3 months when people may be led to believe that the hassle etc will never stop and subsequently drop off, which renders the DMP pointless.

Regards.

[Andrew Graveson]

Hello John,

The response to DMP proposals varies widely and there are several factors involved.

A main factor is whether your DMP company takes an active and proactive approach to negotiating with your creditors. Some are extremely slow to respond to proposals posted to them and an active DMP company can help to counteract this by doing some hard work on the phones a few weeks after your proposal is posted out.

Another major factor is who your creditors are. A good DMP company will be able to advise you in advance of the likely response of each of your creditors. Different creditors react (or fail to react) in different ways.

Of course it's also really important that your proposal is perceived to be fair. If you are clearly making your best offer this will go a long way to help you.

The reaction in the early stages falls into two broad camps:

1 - You are fairly up to date with payments: You are likely to experience some resistance and an increase in phone calls and letters. This will take some weeks to improve. Over time the debts may be passed to debt collection companies and the like. This may seem like a bad thing but actually improves the chances of your DMP company getting a deal done for you.

2 - Your debts are already in significant arrears: Creditors are more minded to accept proposals in this scenario.

Hopefully your DMP company has prepared you according to your circumstances.

The interest question is an interesting one. If you've made a good offer via a good DMP company you have a very good chance of this happening for most/all accounts over time. It's not going to happen immediately no matter what anyone tells you. Some creditors are more open to this than others; another point that your DMP company might be able to advise you on in light of your creditors.

Size5 makes a really good point on expectation setting. We work hard to inform our clients in advance some of the hassle that will occur in the transitionary period and also how they can proactively help us to get the agreements in place. I do hope that the company you have selected will handle this for you at the point they consider it to be appropriate. There are poor companies out there that present an implausably rosy picture of DMP's to maximise their sign-up.

Despite the drawbacks (and all debt solutions have them) DMP's do work out for people pretty well the vast majority of the time if it was the right advice in the first place.