We consider how easy it is to add a debt if you have already started your debt management plan.

There are a number of reasons why you might want to add a new debt to debt management plans (DMP) that are already running.

At the time you started your debt management plan it is likely that your financial affairs were unorganised. If this was the case, it is easy to see how you might have forgotten about one of your debts and therefore missed it out of the plan.

Alternatively it is possible that you decided to try and keep a debt out of your DMP but have now realised that this is not possible to keep up the payments on this debt.

The good news is that one of the key advantages of debt management plans is that they are informal flexible agreements. This means that a debt can be added to your DMP at any time. However there are some implications that you need to be aware of.

Creditor’s reaction to adding a new debt

The way that debt management plans work is that the amount you can afford to pay to your creditors each month is divided between them on a pro rata basis. This means that if one creditor is owed twenty percent of your total debt, they should be paid twenty percent of the monthly payment you make.

Once this calculation has been done and you have started making payments to your creditors, if you then add a new debt to the plan clearly your monthly payment will have to be spread across more creditors and each one will therefore receive slightly less.

This situation must be managed very carefully as some of the creditors already in the plan may view any reduction to their agreed payment as you breaking your agreement. This could then trigger them to start adding interest and charges to your accounts once again.

One way of avoiding this situation is increase your monthly payment slightly at the same time as you add the forgotten debt to your DMP. In this way the original creditors still receive the same payment and have no reason to complain.

If you cannot afford to do this then the change must be carefully explained to the original creditors so that they understand in advance what is happening.

Keeping the debt out of the DMP

An alternative to adding the forgotten debt to your debt management plan is to simply keep it out and to continue to pay it as normal. Because debt management plans are flexible you can keep debts out in this way.

Of course your ability to leave out a creditor will depend on whether you can afford to maintain the normal monthly payment to that creditor.

However there is also another concern. This is that in trying to get your original creditors to agree to your DMP payments, it will be necessary to show them that you are using all of your disposable income to pay them back.

If they discover that you are holding back some of your income to pay another creditor in full this may cause them to become unhappy and refuse to continue to accept the payments you are making to them and trigger their collection activities and interest charges once again.

Trouble with your debt management company

If you are working with a debt management company that is running your debt management plan for you, generally speaking they will be happy to help you add an extra debt if need be.

The debt management company will explain the situation to the original creditors for you thus minimising the risk that they will react negatively.

However there are some debt management organisations which may feel that in missing out the creditor in the first place you have acted dishonestly towards your creditors and they can no longer work with you.

If this happens there is no need to panic. You will almost certainly be able to move to a new debt management plan company who will take over the management of your DMP for you.
 
Best to include all your debts at the start

Debt management plans are designed to reduce the payments you make to your unsecured debts down to a more manageable amount.

As such by far the best way to use a DMP is to include all of your unsecured debts from the beginning.

This way you will not have to struggle to keep up payments to debts that you have purposely left out of the plan or worry about upsetting the other creditors if you need to add a debt after the plan is up and running.

Before you start your DMP if you cannot be sure who you owe money to, the best thing to do is get a copy of your credit file from one of the main credit reference agencies. All your debts will be listed on the file.

However if you have already started your DMP and you then find a debt has been left out that you want to add, doing is certainly possible.

Related DMP articles

If you are interested in reading more expert articles about debt management plans, please click on the following link:

http://www.beatmydebt.com/forum/viewforum.php?f=49

What to do next

If you are struggling with debt and are considering a debt management plan, visit www.beatmydebt.com

Our experts are available to speak to you about the DMP option and offer further help and advice.

Our vibrant debt forum gives free access to experienced industry experts and others who have suffered with debt problems and have been through the DMP process themselves.

Useful guides, calculators and information are also available designed to help you understand how to manage and resolve debt problems.

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