DMP or Debt Management Plan does not prohibit creditors from considering court action to recover what you owed. In fact, they can add further interest and additional charges, request payments via phone call or in writing or start any court process against you.
Though your creditor can further take matters to the court against you, this is unlikely to happen. During your DMP or debt management plan, your creditors are most likely to consider the following actions:
- Refuse or decline your DMP offer
- Continue to request payments on your debts
- Impose additional interest and charges
- Record information or details of your debt on your credit file
- Apply for a CCJ or County Court Judgment
Freezing Interest and Charges on a Debt Management Plan
During the start of your DMP, we will negotiate with your creditors to stop or reduce interest and charges on your debts.
Lenders under their industry code should consider stopping or reducing the interest and charges, especially when the debtor is experiencing a financial crisis. However, creditors and lenders are not legally bound to consider freezing the interest or reducing it. Also, a DMP cannot oblige them to do the same regardless of what debt management company or organization is acting on your behalf.
Furthermore, debts are usually forwarded to a debt collection agency or company while you’re on a DMP. If this happens, your interest and charges are usually frozen or reduced.
What if Creditors Rejects My DMP Payments?
DMP payments are reduced debt payments that are lower than the amount you agreed to pay when taking out the credit or loan. This may result in creditor rejecting the DMP.
This can mean that your creditor might prefer adjusting the offered amount as they don’t find it fair for long-term debt relief. Usually, when this happens, your creditor will forward the debt to a debt collection agency.
Though this response from your creditors is daunting, you must still continue making payments that you can afford. Though your creditor does not agree with the amount, you shouldn’t stop paying your debt. We suggest you contact your DMP provider and make affordable payments regularly.
The affordable payments towards your DMP depend on how much you have left after satisfying your priority bills or essential living costs. You should not get daunted when creditor refuses your payments. If you offer higher payments, it could mean sacrificing your essential living costs and priority bills. Doing so can lead to severe consequences which can make the situation worst.
Can Creditors Contact Me while on A DMP?
DMPs will not stop your creditor from writing or calling you. However, phone calls, emails, or letters from creditors are usually minimal for as long as you stick with the payments.
Moreover, creditors normally reach out during the early stages of your DMP, when you missed DMP payments, or to determine whether your situation has improved.
You’ll also be getting letters from your creditors such as your annual statements while you’re on a DMP. If you perceived that your creditors are still calling you several times in a day or in a week, you must reach out to your DMP provider.
Can I Send Creditors’ Letters to My DMP Provider?
You can send creditors letters to your DMP provider. Though, it is much secured to have it scanned or simply take a photo of it. This is due to the risks of letters being delayed or misplaced by post. If you get some letters from creditors, you can simply phone your DMP provider and get help.
Can My DMP Provider Deprive My Creditors to Contact Me?
While on a DMP, your provider cannot oblige your creditor to stop contacting you. However, they’ll convince the creditor to minimize the phone calls, emails, letters, or any point of contacts
Can I Object About Creditor’s Phone Calls?
If you feel that you have been harassed by creditors’ calls, you can request your creditor to have your number removed on their records politely. If they won’t stop, you can file objection or complaint.
Will a DMP Affect My Credit File?
Since you’re making reduced payments that are less than what you’ve agreed when taking the credit or loan, this can affect your credit file. Your arrears will continue to pile up, which can be recorded in your credit history.
Moreover, your creditor can make your file to indicate that payments are through DMP. Besides, some of your accounts may also show defaults while you are on a DMP.
Can I still Get A CCJ on a DMP?
A DMP is not legally based and dictated by law. This means, unlike the other debt solutions such as IVA or bankruptcy, your creditor can still secure legal action to recover the debt. However, it may be possible to get a county court judgment while on a DMP, this is rarely seen in practiced for as long as you comply with your DMP payments. Generally, creditors are unlikely to seek court action unless you failed to pay affordable payments on your DMP.
Once you start with DMP, your provider will present your income and expenses to your creditor. This will imply how much you have left each month that you can afford for debt payments.
When your creditor decides to apply for a CCJ, the court will decide similarly on how much you can afford to pay on your CCJ. Because of this, your creditor knows that getting court orders is not an assurance for them to get a higher offer.
However, it’s still likely that a creditor could use a CCJ during your DMP. For instance, if you’re a homeowner and your creditor would want a charging order, to secure the debt against your home. Also, in cases wherein your creditor feels that a CCJ may be more feasible for you to stick to the payment plan.
Once you have a CCJ while on a DMP, the CCJ is classified as a priority debt due to the consequences at stake if payments aren’t sufficed.
Is DMP the Right Choice?
If you got letters, emails, calls from your creditors, you can consider DEBT HELP. With our debt experts, helping you to come up with the best debt management plan, it is possible to get rid of your debt in no time. Our online debt advice tool can also help you determine the best debt solution that suits your situation. Should you wish to speak via phone, call us on 0800 193 1024