Debt Management Plan (DMP) Example

Kirsty is a single mother from Chester with a four year old daughter. She works 16 hours a week in a shop and claims benefits. She built up credit card debt whilst she was pregnant and once the baby was born on necessities.

Before her Debt Management Plan

Kirsty owed money to 3 lenders for credit cards, see the figures below:

RBS – £4,550 with a minimum payment of £136.50

Lloyds TSB – £2,130 with a minimum payment of £63.90

HSBC – £890 with a minimum payment of £26.70

Her total debt was £7,570, she was trying to pay a minimum of £227.10 per month and even at this rate it would take her around 14 years to clear her cards.

Unfortunately, she was regularly unable to afford to pay the minimum meaning that she missed payments and was charged for this, at up to £30 a time, this was increasing her debt each month rather than allowing her to reduce it.

During her Debt Management Plan

After contacting us, we assessed her disposable income (DI) at £150 per month, this is what she pays each month into the plan, she is able to afford this as it is based on her circumstances, not what she owes.

NatWest is paid £69.00 based on 60% of total debt

Lloyds is paid £32.20 based on 28% of total debt

Barclays is paid £13.80 based on 12% of total debt

Fees come to £35

Additionally, as we were able to freeze the interest and charges with all three lenders, the amounts that are paid are paid directly off what she owes. In this case we were also able to reduce the term to 5 years 6 months.