It is possible to change your debt management company at any time. You can switch to a different provider or start managing the Plan yourself.
In this article:
- Is it possible to change your Debt Management Company?
- How to switch to a new provider
- Can you start managing your own Plan?
- Could you stop and use a different solution?
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Is it possible to change your Debt Management Company?
A DMP is not a legally binding agreement. As such if you are using a company to manage the plan on your behalf you will have no legally binding contract with them. This means that you can stop using their services and do something different at any time by simply cancelling your payments.
However before you do this you should make sure you have your next steps planned out. If you stop making your agreed payments to your creditors even for a month they are likely to start their collection activities against you again and may start adding more interest where this was previously on hold.
How do you switch to a new Debt Management Company?
There are a large number of debt management companies to choose from. It is therefore often very difficult to know whether or not a different company will give any better service than the one you are currently working with.
The best thing to do is do some research and try to get a recommendation that you trust. You could also follow one of their experts on a debt management forum. Take some time and become familiar with what they are saying. If you get the feeling that they are doing a good job, give them a call and have a chat.
BMD Tip: If you are already in a DMP and do not want to add any additional creditors there should be no reason to pay a fee to the new company to take on your case.
Can you start Managing your own Debt Management Plan?
The alternative to using a new company is to simply manage your DMP yourself. This should be relatively easy as your original management company should have given you a report detailing how much they are paying each creditor each month.
It is quite acceptable for you to contact your creditors yourself and let them know that you will be paying them directly from now on.
If you have been paying a monthly management fee to your management company then managing the Plan yourself from now on may well be to your advantage as all of your monthly payment will go to your creditors thus enabling your debt to be paid off more quickly.
Can you Stop your Plan and Use a Different Debt Solution?
While you are on a DMP it is always sensible to review your circumstances periodically and consider whether a different solution might work better for you.
If you are finding that your creditors are continuing to add interest and charges to your balances or the length of time it will take you to repay your debts is unreasonably long then you might find that an Individual Voluntary Arrangement (IVA), Bankruptcy or a Debt Relief Order would be a better solution for you.
If you are unsure about the advice you have been given about these solutions in the past, then it is always sensible to speak to a different advisor and compare the advise you are given.
All too often, people chose not to use a solution that would ultimately be far better for them because they have misunderstood the implications or have simply been given incorrect information.
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I already have a DMP set up. I am wodering if I can do this myself as I am paying a Company to do this for me £39 per month.
Hi Pam
If you want to take over the management of your DMP there is nothing to stop you. You can cancel your agreement with your debt management company at any time without incurring any extra cost. You just need to stop your monthly payment and tell them you are going to manage it yourself from now on.
You will then need to contact each creditor and inform them you will be making the payments directly to them yourself. You can use the £39/mth to increase the payments you make and so pay off your debt faster. Alternatively you could hold it back to save for emergencies or for a lump sum to make early settlement offers.
I feel im constantly being harrased bu my dmp i did a review in oct and now i have extra 50.00 to add to it they want me to do another review its quiet stressful and distressing why cany they just add it i will now be paying 300 … is their payment
Hi Julie
Over the past few years the regulation of debt management companies has been taken over by the FCA (financial conduct authority). As a result DMCs are now required to do a full review of their customer’s financial circumstances at least once a year.
On top of this if your income increases half way through the year, the DMC can’t accept an increased payment from you without carrying out a new income and expenses budget with you to record the change. They need to know where the extra money has come from and how it increases your surplus income.
I would not be too worried. I am sure the new review will be very quick and easy to complete. However if you really don’t want to do it the alternative option is keep your payments the same. You can save the extra £50/mth and eventually you might have a lump sum which you can use to pay off one or more of the creditors in your plan early.
Hi, I have some questions if I may.
1. I have seome debts that are currently collected by debt collecter rather then the original creditors. Can i put these into a dmp instead?
2. Can I switch my dmp company even though I ve already been with them 2 months?
Many thanks
Hi Joy
1: Debts being collected by a debt collecting company can certainly be included in a debt management plan. Very often collecting companies are actually easier to deal with when implementing a DMP than the original creditor. If you have already started a plan and have left these out, they can definitely be added.
2: You can change your debt management company at any time. It does not matter if you have been with them only 2 months or for many years. If you are not happy with them and feel a different company would be better, you can switch at any time.