DMP practitioners will seek to strike a satisfactory balance between creditors and the debtor. Naturally the creditors want to see that their client is doing what they can to quickly repay what they owe. Similarly there is no point in setting up the payments for a debt management plan so high that the debtor has no option but to cancel the plan or to start missing payments occasionally. Striking this balance is an important function of good debt management charities and companies.
Prior to advancing with a DMP the person in debt must agree to the proposed payments, which are always worked out based on the amount of income that remains after necessities are calculated. By making this calculation the debtor can be assured that the payments are affordable and that the DMP company has considered all their personal needs.
It is essential that you are not rushed into a DMP if you're unsure. Not all DMP companies have the interests of the debtor in mind. The greater the scheduled payments are the more revenue the practitioner is likely to earn themselves in the short term, spending figures can be altered to achieve this. All reputable providers acknowledge the importance of a manageable repayment schedule as this best suits all parties involved.
To anticipate the monthly instalments you should take all your total earnings after tax and take off all reasonable costs such as electricity and council tax. The figure you are left with is the amount that will be repaid to creditors.
Basic costs which are regarded as "reasonable" include water, electricity bills and fuel. Infrequent costs like home repairs and essential automobile work would also be regarded as reasonable and should be included in the payment plan.
Included in the "reasonable" calculation is whether specific expenses meet the standard ranges of costs used by both DMP providers and creditors alike to demonstrate fairness in such situations. Using these ranges means that the different priorities that each family or individual have can be accommodated, instead of a "one size fits all" concept being dictated.
The fundamental aim is a debt management plan payment that demonstrates a commitment to creditors whilst supporting the requirements of the debtor and his or her offspring. An efficient DMP operator can use their knowledge of the debt management expenditure criteria and their real experience of the things creditors do and do not approve to make sure such an aim is obtainable.
Any debt management plan provider that wants you to make a monthly repayment which doesn't seem feasible (in the long-term as well as now) shouldn't be used. Get advice from other debt advice companies before going ahead with a DMP. If this is not a sustainable DMP you risk fixing one issue by causing further problems.