What if you can’t pay your DMP because of Coronavirus
Has the coronavirus meant your income has fallen? Are struggling to pay your debt management plan as a result? If so, there are various things you can do that will help.
Included in this article:
- Take a break from your payments
- How to reduce the amount you pay each month
- Could you change to a different debt solution?
Rather speak to a person? Call 0800 044 5407 or fill in the form below and we’ll call you
Coronavirus reduced your income? Take a break from your payments
If you are struggling to pay your debt management plan (DMP) because of the coronavirus, it is possible to take a break from your payments. This could be a big help until your income gets back to normal.
The break must be agreed with your creditors. You can’t just stop paying or it may trigger them to re-start their enforcement action. But if you do talk to them they are obliged to assist you during this particularly difficult time.
If you are already working with a debt management company, speak to them. They will arrange a break on your behalf.
A payment break is only suitable if the reduction in your income is short term (say 3-6 months). If the change is more permanent it is unlikely to help.
Reduce the amount you pay into your Plan
Perhaps you have lost your job and had to take a lower paid one. Alternatively you might have had to accept a reduction in your income or the overtime you were used to getting has simply been cut due to coronavirus.
In these circumstances a payment break won’t work. You will have to reduce the payments you make into your Plan moving forward.
To do this, first update your income and expenses budget to work out your new disposable income. Your debt management company will help you with this. They will then speak to all of your creditors and agree the reduction.
It may not be possible to reduce your payments if they are already relatively low (less than £100/mth). Where this is the case you may need to change to a different solution.
Could you change to different debt solution?
The impact of the coronavirus on your income may mean that you can no longer afford to make any payments towards your debts. If this is the case, your DMP is no longer suitable and you will need to do something else.
Although it sounds scary, you should consider going bankrupt. The huge advantage if you do this, is that your debt is written off. You don’t have to make any further payments if you can’t afford to.
Of course, bankruptcy is not for everyone. But it is worth looking into as you may be surprised.
Generally speaking you need to be living in rented accommodation. Your landlord is not told. Neither your landlord or employer will be told and you can continue to use a bank account.
Where the total debt you owe is less than £20,000 you might also be able to consider a Debt Relief Order. This is cheaper to implement than bankruptcy.
Struggling with your DMP payments because of coronavirus and want to discuss you options? Give us a call (0800 044 5407) or complete the form below.
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