A DMP helps individuals or households manage their debts, when they can’t afford their contractual payments.

A debt management plan (DMP) is usually arranged by a third party on your behalf. They then consolidate your debt payments and help you to deal with your creditors. Most debt management companies that offer DMPs will charge a fee for this service.

How a DMP works
DMPs aren’t region specific, so regardless of where you live in the UK, a DMP could help you to get your financial situation back on track. The first thing you need to do is work out a budget you’re able to live on. This shouldn’t include payments to your debts but needs to cover household costs such as rent or mortgage, utility bills and food shopping. This will then show you how much money you’ve got available to pay your unsecured debts.

The third party will contact your creditors and arrange a monthly payment based on the amount you have available.

You normally pay a DMP by making one monthly payment, which is then shared between your creditors. If you have to pay a fee for a DMP, this will be deducted from the payment and the debt management company will then send the remaining money to your creditors.

Things to consider with a DMP
It’s important to remember that with a DMP:

• It’ll take longer to repay your debts as you’ll be making reduced payments
• Interest or charges could be added to your debt, making the total you repay higher
• Your credit rating could be affected

A trust deed is a legally binding arrangement in Scotland where you make reduced payments over 4 years. At the end of this time, your unsecured debts are usually written off.

A trust deed is a form of insolvency, so your unsecured debts need to outweigh the value of your assets, such as a house or vehicles. Unsecured debts include things like credit card debt, personal loans and store cards.

Trust deeds are only available if you live in Scotland. If you live in England, Wales or Northern Ireland, an Individual voluntary arrangement (IVA) is a similar solution, but it’s important to note that it has different benefits, risks and fees associated with it.

How will a trust deed affect me?
A trust deed should be carefully considered because of the possible consequences for your personal, professional and financial life. These include the following:

• You’ll have to keep to a budget for the full term of your trust deed: usually 4 years.
• In addition to your employment, a trust deed can also affect any hire purchase agreements you might have.
• Your details will also be added to a public register, called the Register of Insolvencies (ROI), for a period of five years. The register is maintained by the Accountant in Bankruptcy (AiB) and is available for viewing by the general public. It contains all details of current protected trust deeds.
• There will be restrictions on your spending during your trust deed. You’ll have to stick carefully to a budget to ensure you can afford the monthly payments.

Who oversees my protected trust deed?
You can’t set up a trust deed without an IP (they’re known as your ‘trustee’). The IP draws up a proposal and will also help and support you throughout the arrangement.

If you’re recommended a trust deed, you’ll be referred to one of our four trusted third party organisations: KPMG, Campbell Dallas, French Duncan or Grant Thornton UK. One of these organisations will set up and administer your trust deed.

While a trust deed may be the correct solution to your financial situation, there are some other options that you might want to take a look at:

• A debt payment programme (DPP) under the Debt Arrangement Scheme (DAS)
• A debt management plan (DMP)
• Sequestration
• Minimal Asset Process (MAP)
• Advice on trust deeds

Trust deeds are a specialised area of Scottish debt advice. To make sure it’s the best solution for you, use our online Debt Remedy tool. We’ll provide you with a tailored budget and the best solution to help you deal with your debts.

National Debtline: 0808 808 4000 FREE

National Debtline offers debt advice for people living in different parts of the country. This is because the law concerning debt varies depending on whether you live in England and Wales or Scotland.

The helpline provides free, confidential and independent advice on how to deal with debt problems. The helpline is available on Monday – Friday from 9am-9pm and on Saturday from 9.30am-1pm. Calls are free from a landline.

You can also get help through the website: www.nationaldebtline.co.uk

On the website you can:

• Download an information pack to deal with your debt problems.
• Use a personal budget section to work out what repayments you can afford.
• Use a suite of sample letters to write to your creditors.
• Visit the debt advice section to get information that may help you deal with your debt problem.
• Access a library of factsheets.
• See if you can pay your debts via a Debt Management Plan (DMP)
• See if you qualify for a Debt Relief Order
• See what options you have for dealing with your debts