DMP Fees

A DMP is a way of effectively consolidating payments to multiple creditors into one, manageable and affordable monthly amount. The amount paid will vary from case to case, but the important thing to remember is that it will be based on individual circumstances and will never be more than the individual can reasonably afford.

Setting up a DMP

While an individual can put forward a DMP proposal to their creditors, many prefer to opt for a debt management company to manage the DMP on their behalf. They will request all financial information from the debtor to calculate what can be reasonably afforded on a monthly basis. They will speak to the creditors on behalf of the individual, and once agreed, they will collect the monthly payment and be responsible for paying the correct amount to each of the creditors involved.

Debt Management Company fees

• Charitable or non fee paying organisations - There are many debt management companies available. Some are charitable organisations or are a non fee charging service, such as the Consumer Credit Counselling Service (CCCS). These companies will be able to advise on the options available as well as assist in setting up the DMP. As they do not charge a fee, they are very popular and often have very high case loads resulting in delays and lengthy set up times. Furthermore, there is unlikely to be a dedicated contact within the organisation.
• Fee Charging Organisations - The majority of companies providing Debt Management Services will charge a fee. They will usually offer a free consultation to establish the best action to take, and if their services are required, a fee will then be charged. There are no obligations after a free consultation and it is often advisable to shop around to get the best deal. The fee itself will be comprised of an ongoing fee usually around 15-20% of the monthly amount and will be taken before the creditors are paid. There is often an initial administration fee, and this maybe 100% of the first 1, 2 or even 3 months repayment. While it may seem a lot, Debt Management Companies are specialised in their field and could be able to agree a better rate with creditors, therefore the fee could actually be worthwhile, especially as there will be always someone to talk to in the event of an issue.

Shop Around

It is always worthwhile shopping around to establish the best option. Debt management companies do need to have a consumer credit licence and may have their code of conducts approved by the Office of Fair Training (OFT). It is also worth checking online to see if there is any feedback from others that have used the services. Testimonials can save a lot time and effort later on.