We experience changes in our lives all the time. This includes our personal finances. But what if this happens whilst you are in an informal debt plan? ‘Can I change my DMP payment?’ Rather speak to someone? Call 0800 077 6180.
Included in this article:
- Can you reduce the amount you pay into your plan
- Change my DMP payment – increase to pay it off quicker
- What if you can no longer pay anything?
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Can you reduce the amount you pay into a plan
While you are paying your debt management plan you may find that your financial circumstances change for the worse. This means that you need to reduce the payments that you make each month.
Because the Plan is informal and flexible you can reduce the payments that you make at any time. You are not legally bound to continue paying the amounts originally agreed.
Having said that you need to be aware that if you reduce your payments, your creditors may consider this to be breaking the agreement you have made with them. In turn it may trigger them to start adding interest and charges to your balances again which previously they had frozen.
Reducing your payments means it will take you longer to pay off your debt. A typical DMP takes between 5 and 10 years. There are other solutions that could be quicker, for more details Call 0800 077 6180.
Change my DMP payment – increase to pay it off quicker?
If your financial circumstances improve allowing you to increase your monthly payments into your DMP you can certainly do this. In fact you should always try to increase your payments if possible.
Because you have to repay 100 percent of your debt the more you can pay each month the faster you will pay off your debt. This will finish the agreement and you will become debt free.
On the other hand because the Plan is an informal solution you are not obliged to increase your monthly payments. If you need to use the extra money for something else or prefer to save it there is nothing to stop you doing this and keeping your Plan payments the same.
One of the benefits of a DMP is that you can deal with creditors individually. If you have extra money you may want to clear a specific debt first. Perhaps one that has not frozen interest and is costing you more each month.
What if you can no longer pay anything?
It is possible that a change in your circumstances completely wipes out your disposable income each month. With some smaller monthly payments of less than £100 a month, this is quite easy to do.
It could be a drop in income, perhaps less overtime hours than normal. Or perhaps you have new expenses that you now have to pay. If the reasons are genuine, then you should get advice on what other solutions are available.
Many people are unable to pay anything towards their debts. Whilst you may not want to consider it at first, a formal solution such as a Bankruptcy or a Debt Relief Order may work for you. These solutions include writing off unaffordable debt.
If your situation is temporary you may still be able to keep the DMP going. Tell your creditors what is going on and offer them a token of £1 a month just until you are back on your feet and able to resume normal payments.
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