“Bright Oak are doing a wonderful job of managing my finances, for that I thank you as we are now living a better life." (Mr C – by email)

A DMP can help anyone who wants to repay their debts, cannot afford the contractual repayments, but can afford to pay an amount towards the debts each month.

There are a huge range of different but sensible reasons why people choose a DMP to deal with their debt concerns. Some common scenarios include:

• An attempt to repay debt without recourse to formal insolvency (such as bankruptcy or an IVA). Formal insolvency can threaten assets (such as a home), can be inflexible and can cause significant issues for those in certain professions. DMP’s can offer a more flexible and informal solution.
  
  
• A measure to deal with short or medium term repayment problems. Some people are waiting for a work promotion, waiting for their home to sell, waiting for work overtime or bonuses to return, or waiting for expenditure to significantly reduce when children leave the home. DMP’s can be used to manage such situations until such time that debt affordability is restored.
  
  
• A measure to protect a home. In bankruptcy it would be expected that any equity held in a home be paid towards the debts. This often requires the sale of the home. In an IVA any equity held in the home will be considered towards the end of the IVA. This can result in a major remortgage having to take place. This can mean that much unsecured debt is carried well beyond the end of the IVA but now it’s secured on your home.
  
  
• A measure to protect professional status. Formal insolvency (bankruptcy or IVA) can be challenging or impossible for certain professionals. A DMP is an “informal” agreement with creditors and therefore does not present the same issues.
  
  
• The means to conform with moral, ethical or religious considerations. Many people want to repay the money that they have borrowed (which is unlikely to be fully the case in bankruptcy or an IVA). Where it is impossible to continue making payments at the contractual rates a DMP plan can facilitate the repayment of the full amount at a rate that is affordable.
  
  
• Where flexibility is required. DMP’s are often preferred to IVA’s where people are uncertain about what the future holds for them financially. This particularly applies to the self-employed who can be subject to significant increases and decreases in income. DMP’s are flexible in that they can readily be altered to accomodate changing circumstances.
  
  
• For reasons of secrecy. For personal reasons many people are unwilling to share their debt concerns with immediate family. Joint homeowners are highly unlikely to be able to proceed with bankruptcy or an IVA without the co-owner being aware for example. We encourage openness in this scenario but where people feel that is not possible a DMP may be helpful.
  
  
• Because other options aren’t available or acceptable. Homeowners with equity greater than their unsecured debts cannot normally enter into IVA’s. In the same scenario a bankruptcy would generally result in the sale of the home which many people wish to avoid. Creditors have set criteria by which they will or will not accept IVA’s which in recent years have excluded more and more people from this solution. In such circumstances a DMP can be the best option.
  

“I would like to thank you for taking the time recently to discuss my case. My wife and I are delighted to be working with a company such as yours that is professional and sympathetic towards its clients who are in
financial trouble." (Mr W – Midlands)

There are other debt solutions. Each should be fully considered as each has merit in certain circumstances and a DMP is not always the best solution. We recommend that action should only be taken after taking advice from a debt solutions professional. Bright Oak provides advice on all debt solutions.

How does the Debt Management Plan process work?

Will creditors accept a Debt Management Plan?

Other Debt Solutions?