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Four Debt Management Plan Survival Tip

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Starting a debt management plan (DMP) is a great first step towards taking control of your debts. DMPs are popular because they’re flexible, easy to arrange and informal. They’re also suitable for people in work and on benefits.

Living on a DMP isn’t easy, though, and you may occasionally run into difficulties meeting your agreed payments. Here are some tips that will help you deal with difficulties while on a DMP:

1. Be realistic about what you can afford from the start.

When you first set up your DMP, a professional debt advisor will work with you to determine what your monthly outgoings are and record any money coming in: wages, benefits and so on. It’s crucial that this list is as accurate as possible. Don’t underestimate your bills, and make sure you capture any bills that are paid out quarterly or annually. The more honest you are at the beginning, the more accurate your DMP will be, and the more likely it is that you’ll be able to stick to it.

2. Stay in touch with your provider.

Our circumstances change all the time, and big life events can completely change our household budgets and the amount of money we have to spend each month. If you are made redundant, split up with your partner or find you are expecting a child, you should speak to your debt advisor as soon as is practical so that they can work with you to come to a realistic solution.

3. Don’t take on more debt – especially not payday loans.

If you find yourself struggling with the DMP, don’t be tempted to borrow more money to keep up with the repayments. Some people unfortunately start to rely on payday loan companies and find that they get locked into a vicious cycle of interest and charges. Others take loans from family and friends that they are unable to pay back. If you have problems, communication is key; don’t try to struggle on alone.

4. Keep your options open throughout your DMP.

Over time, you might find that another debt solution becomes more attractive, practical or affordable. Some people on DMPs eventually decide to go bankrupt and start all over again. Some people reconsider and find that an IVA would be a better option for them. The great thing about debt management plans is that they are not legally binding; you can start off with a DMP and move to another solution later. Always keep an open mind.

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