Debt Management Plan (DMP)

Dealing with Priority Debts

If there is money available, make an offer to your priority creditors first. Remember, they have greater power of recovery and might not want to negotiate!

Dealing with Non-Priority Debts

Set up a Debit Management Plan. Make a pro rata calculation and distribute the money equitably to your non-priority creditors. The formula is:- individual debt x total offer ÷ total debt - example of pro rata calculation:

  • A client has total debts of £15,000 and available income of £200 a month.
  • He/She owes £10,000 to credit card company A and £5,000 to credit card company B
  • Monthly offer to creditor A: £10,000 x £200 ÷ £15,000 = £133
  • Monthly offer to creditor B: £5,000 x £200 ÷ £15,000 = £66

Stick with the offer!!! Do not make offers that you cannot afford!!!!


Sample letter to send to non-priority creditors

Date


Name & address of creditors


Dear Sir/Madam,


Account No:


As you can see from the attached financial statement, after meeting essential expenditure, there is an offer of £xxxxxx a month. We hope this is acceptable to you and that any interest can be frozen.

Meanwhile, we trust that you will take no further action against our client.


Thanking you in advance.


Yours faithfully,


Signature