DMP FAQs
Will interest and charges be frozen on a DMP?
Creditors are not obliged to freeze interest and charges; therefore your debt value could increase if creditors continue to add additional fees to your account. Baines and Ernst has formed excellent relationships with the vast majority of UK creditors – putting us in a strong position to request the freezing of interest and charges.
Other frequently asked Debt Management Plan questions
Q: How long will a Debt Management Plan last?
A: A Debt Management Plan is specific to the individual’s personal situation. This means that the length of a DMP will depend on your level of debt, income and the amount of disposable income you’re left with after paying monthly bills. Length of time will also depend on whether you continue to repay debts at a reduced rate as this could extend the period in which you repay your debts. A DMP allows you to increase repayments as your situation improves, making it a flexible debt management option. To discuss your personal financial situation with an expert advisor, call: 0800 015 3135†.
Q: Can I cancel a DMP after it begins?
A: A DMP is not a legally binding agreement; therefore you can cancel your plan. If you choose to progress without the help of a professional debt management company, then you should expect creditors to resume their standard lines of communication which could mean that they increase their demands for repayments.
Q: Will all my creditors agree to a Debt Management Plan?
A: Debt Management Plans are not legally binding, so you do not need creditor agreement for a DMP to begin.
Q: Will my credit rating be affected if I enter a Debt Management Plan?
A: Your credit rating will be affected because you are paying a reduced repayment rate – not the contracted amount you had previously agreed to. If you have missed payments in the past or even paid a bill later than you should, then your credit rating may have already been affected.
Q: Will creditor hassle stop?
A: A DMP is not a legal agreement between you and your creditors, therefore creditors are not required by law to stop communication with you. Unfortunately, we can’t stop creditors contacting you, but we can reduce stress by dealing with your creditors and handling telephone calls and letters while you are on a DMP. Most creditors will contact us once the plan has been set up, so you should see a significant drop in communication when a DMP begins.
Q: Do I have to open a new bank account?
A: You do not need to open a new bank account, but we would advise you to do so if one of the creditors you owe money to is the bank you have an account with. This is because banks have the right to access money in your account to repay outstanding debts owed to them.
A bank account without an overdraft facility will help you avoid additional charges while you are getting your finances back on track. We recommend the Evolution Current Account.
The Evolution Current Account offers:
• Guaranteed acceptance (subject to proof of identity)
• No credit checks
• No more overdraft charges
• A simple application process
• Safe and secure internet banking
• Help managing your money
• Cash rewards
Q: Can creditors issue a CCJ or any other type of legal proceeding if I enter a DMP?
A: A DMP is not a legally binding contract; therefore creditors can still take legal action against you. If you make regular repayments through an agreed Debt Management Plan, then creditors will see that you are making a concerted effort to repay your debts and may not take further action, however this is not guaranteed.