A Debt Management Plan is an agreement to make ongoing affordable repayments to your creditors on a regular basis - providing each creditor with an equal share of your disposable income in proportion to the amount they are owed. Disposable income is calculated by adding all of the household income together, and then deducting usual household bills (not including debt repayments). The balance left is what you should be offering your creditors, but make sure some is left for contingencies.
It is possible to propose a DMP yourselves, without running to the costs of an independently managed plan, and this will mean that more money is paid over each month as you will not be paying fees to a management company. However some people find the stress of continuing to deal with their creditors too much, and prefer to have someone formally representing them. Either way, they seem to work with some limited success.
Creditors seem to like DMP's as they get regular monthly payments which continue until the debts are repaid in full. The danger for you lies in the fact that the creditors are entitled to charge interest, and that you have no rights to stop them from pursuing legal or other ongoing collection actions. DMP's therefore do not have the same level of protection as IVA's.
I have noted that your IVA has been turned down by your preferred IP on the basis that your husband only has guaranteed income for the next 12 months. I can understand their nervousness, as your husband was previously unemployed for 18 months. A DMP for 12 months, while he looks for more permanent employment does not, therefore, seem to be a bad idea.
Regards, Melanie Giles, Insolvency Practitioner for over 20 years.
View my IVA blog at:
http://melaniegiles.blogs.iva.co.uk
