Redundancy When DMP is right choice
Summary: Redundancy - This paper considers options to those who have been made redundant and suggests that a Debt Management Plan (DMP) may be a short or long term solution.
Redundancy and financial factors
Redundancy may affect us in all sorts of ways - emotionally, psychologically - but certainly financially. The stable, guaranteed income is no longer there. Or some, there may be a redundancy package that will enable us to continue to live whilst we look for another option. If we have debts it may be that we could use a lump sum to settle debts through a Full & Final IVA or settlement offers to creditors. Many others aren't so lucky. Of course we have to ensure any benefit entitlements are applied for and if mortgage or council tax relief is available, or some insurance cover applicable - that these are activated.
Redundancy and unsecured debts
If we have been managing our unsecured debts whilst in a job, redundancy can change all that. The first step is likely to be to contact our creditors to alert them to the change of circumstances we face. It may be that we find that our creditors are more understanding than we expected and agree to token payments for a period. Citizen's Advice Bureau may help with this. Something - even £1/mth to our creditors is always better than nothing.
Can a DMP help?
It may be though that we would prefer a third party to help with the communication with the creditors and a DMP company will bring experience to bear on a plan. This may especially be the case if we have a number of creditors and fear missing payments or are not looking forward to what could be some aggressive pursuit of the debt by any of the creditors, or rising debt levels through added interest or extra charges.
A DMP company will demonstrate clearly the whole picture regarding a debtor's financial position with regard to income, outgoings and debt levels. Each creditor will be able to see that the debtor in a DMP is paying a monthly payment based on what they can realistically afford, and that each creditor is receiving their proportionate share of that available income.
Short or long term DMP?
Many will need help just during the redundancy period and they can end the DMP once a new job is found. Others however may feel that they need to continue the DMP after securing another job. It may be that the contractual repayments were difficult anyway or it may be that the new job involves a reduction in income making the DMP necessary.