A DMP should not be confused with an IVA which is a legal process administered by a licensed Insolvency Practitioner which, because of its formal approach is far more conclusive. Hopefully the following notes will explain the process...
 
debt consolidation. A typical DMP consolidates all of a debtors unsecured debts into a single and more affordable monthly repayment which is then paid to creditors on a pro-rata basis over an agreed period of time. This payment is carefully calculated by a trained debt consultant who, with the debtors assistance will thoroughly review their current financial position before suggesting a figure that will put the debtor back in financial control. The monthly amount that is offered to creditors is determined by the amount that the debtor can reasonably afford after their normal cost of living expenses have been deducted from their income. This will ensure that the debtor never gets into any arrears or misses paying any of their priority commitments such as their mortgage or rent, car finance, utility bills and council tax, etc.
 
A debt management company sets out the offer being made to creditors. This includes the monthly amount that the debtor is able to pay their creditors and over what period of time. It will explain to creditors the debtors circumstances and highlight the advantages to them in accepting the offer being made. The debt management company request that creditors agree to stop any further interest accruing on the outstanding debts and to stop any further charges and asks them not to take any legal or any other action to recover the debt providing the debtor keeps to the terms set out in their DMP.
 
Once the debtor has agreed that the details set out in their DMP are correct a copy is sent to each of their creditors so that they can consider the offer being made. Like all informal arrangements, creditors are not obliged to agree to the DMP but they are more likely to accept it once they are made properly aware of the debtors true position. Once agreed, the DMP is usually administered by the organisation who drafted it.
 
Once a DMP has been agreed by creditors, it is the debtors responsibility to continue paying the agreed payments to their administrator.. The administrator will then ensure that these payments are distributed promptly to all creditors on a pro-rata basis until its successful completion. It is in the debtors own interest to maintain these payments as failure to pay could result in creditors cancelling their agreement and demanding repayment of their debts in full. This situation should be avoided at all costs. If a debtor experiences difficulty in making their agreed payments they should contact the administrator of their DMP who should be able to re-negotiate with creditors.
 
Each DMP should be regularly reviewed which amongst other things explores the possibility of creditors accepting early settlement. Once a DMP is completed the debtor will then be considered debt free and be able to make a fresh financial start.
 
There are many genuine companies offering professional debt management services and in most circumstances this process can be used very successfully. However, there are several possible shortfalls that could arise. If, after reading these notes you feel that a DMP could be right for you we would urge you to use the following criteria....
 
Before using a debt management company you should be satisfied that the debts you have will be cleared in less than five years, otherwise, you may be better off using a different type of action such as an Individual Voluntary Arrangement (IVA). You can work this out in the following way. Multiply your debts by 17.5% and then divide the result by the monthly amount you can afford to pay.  This will give you the approximate number of months it will take to clear your debt, subject to your creditors agreeing to freeze interest and stop charges.
 
    * Make sure that you use a fully licensed debt management company who adhere to the DTI's debt management guidelines.
    * Establish any charges that you will have to pay for their services.
    * Ask to see evidence that they are trying to or have secured a freeze on all charges and interest and ensure that this continues during the DMP.

The links for both these compnaies are below:
 
CCCS - click here
 
Payplan - click here

DMP's are always an option but the main thing we look at is : How long will any repayment plan take to repay the debts...?
 
Next - why prolong the agony if BR is a viable option and you can be debt free within a maximum of 3 years.. I prefere DMP over IVA... IVA's are too tight a budget and last too long..
 
But as you mention, a DMP is no barrier to legal action being taken..  
 
Valid points... decision ultimately rests with the person seeking help..