We ask whether you can change the monthly amount that you pay once you have started a debt management plan.

Debt management plans (DMP) are a popular way of solving personal debt problems. The DMP debt solution allows you work out what you can afford to pay to your creditors and offer them each a percentage of this depending on how much they are owed. This brings your monthly payments down to a manageable amount.

One of the key advantages of the debt management solution is that is that it is an informal agreement with your creditors. The agreement is flexible and the payments you make each month can be changed.

Having said that however, changing your DMP payments once they have started may have implications for the ongoing success of the DMP so you need to be aware of these before making any change.

Increasing your DMP payments

If your financial circumstances improve allowing you to increase your monthly payments into your DMP, you can certainly do this.

In fact you should always try to increase your payments if possible as when you use a DMP debt solution, you remain responsible for repaying all of the debt you owe.

Because you have to repay 100 percent of your debt, the more you can pay each month, the faster you will pay off your debt, finish your DMP and become debt free.

On the other hand, because the debt management plan is an informal solution, the advantage is that you do not have to increase your monthly payments even if you can afford to do so.

This means that if you need to use the extra money you have for something else there is nothing to stop you doing this and keeping your DMP payments the same.

Reducing your DMP payments

While you are paying your debt management plan payments, you may find that your financial circumstances change for the worse meaning that you need to reduce the payments that you make.

Again, one of the key advantages of a debt management plan is that you can reduce the payments that you make at any time. You are not legally bound to continue paying the amounts originally agreed.

Having said that you need to be aware that if you reduce your payments, your creditors may consider this to be breaking the agreement you have made with them. In turn it may trigger them to start adding interest and charges to your balances again which previously they had frozen.

And of course, if you reduce the amount you pay to your creditors each month, this will extend the length of time it will take you to repay your debt in full and become debt free.

For these reasons it is not a good idea to reduce your DMP payments unless you really have no other choice.

Paying your debts early

If you start paying into your debt management plan and then find you are in a position to pay off your debt early in full you are allowed to do this. You do not have to stick to the monthly payments originally agreed.

You may find that you receive a lump sum of money for some reason, perhaps an unexpected bonus or windfall. Alternatively a third party friend or family member may be willing to lend you a lump sum. You can then use this money to pay off your debt in full if you wish.

However instead of paying off 100 percent of your debt you might actually be able to use the lump sum you have received to make offers to settle your debts for less than you owe.

In this way you could become debt free even if the lump sum you receive is less than your total debt.

However if you do manage to negotiate settlement figures, you need to be aware that on your credit file, the record of your debt may be marked as part settled rather than settled in full and this could have an ongoing affect on your credit rating.

Use a DMP if your circumstances might change

Ultimately one of the main advantages of using debt management plans is that they are very flexible solutions.

If your ability to pay changes for the better or worse, you can change the amount you pay into your DMP each month without the worry that you are breaking any kind of legal contract.

For this reason DMP debt solutions can be very good solutions if all you are looking for is a breathing space from your creditors because you believe your finances will improve in the future.

Their flexibility also means that debt management plans are suitable for people whose immediate financial situation may be uncertain for example if you are self employed and unsure of your income which may increase or decrease in the future.

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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