Debt Management Plans (‘DMPs’)

R3 have been working with Yougov to find out just how many DMPs there are in the UK. Until now, because there is no register of DMPs and DMP providers do not have any reporting obligations like IPs do, no one rellay knew how many people were in DMP, all we knew is that anecdotal evidence suggested that it was a big number.
That number is not just big, it is truly huge – 600,000 – explaining the burgeoning and largely unregulated industry for ‘informal debt solutions’.
Let’s look at that figure again.  You could fill Wembley Stadium more than 6 times with people in DMP, and that excludes their family members who are effected by it!
A few days ago I received an unsolicited e-mail from a DMP provider.  The same provider sent a similar e-mail to the 14 year old daughter of a colleague of mine, himself a Licensed Insolvency Practitioner! Naturally, he was not happy.
I filled out their online questionnaire with a bogus set of ‘facts’, whereby I had no assets, minimal income (initially I told them I had ‘free income’ of £200 per month), and £65k of unsecured debt.  The response I received back electronically was that I could be suitable for a DMP.  Note that on the basis of the facts that I gave it would have taken over 27 years to pay off my creditors (and that assumes they waive all interest), I had no assets or income to protect, yet they still initially told me online that a DMP could be a good solution for me!  They were ‘selling a dream’.
I then spoke to a debt adviser.  She asked nothing about what I wanted to achieve.  She did not ask my age (such a DMP would take me well past my retirement), nor my marital status (so how could they assess the impact on my wife?).   She did not ask what I did for a living (and therefore could not assess any potential impact the alternatives to DMP could have on my ability to earn a living), th existence of joint debts/assets, the possibility of third party contributions, my future income earning capabilities (I could be severely disabled for all they know), whether I was self employed or a Schedule E employee, no detail about my income and expenditure, whether I was expected to come into money soon (such as an inheritance), no explanation as to how I had run up £65k of unsecured debt (what habits, if any, do I need to break, has illness or divorce caused this, or was it a result of a business failure?), and other key facts.  The adviser, whilst very sympathetic, was obviously only trained in certain aspects of dealing with debt.  She was simply following a script, and an incomplete and pretty poor one at that.
I made my excuses and finished the call, I said that I hoped my free income would increase in coming months as things at work improved, thus I felt that I should take a final decision as and when I had a stable set of known facts as regards my income  But based on the figures I gave them in overview as to the extent to which my income is taken up by mortgage payments, the solution should not change greatly (bankruptcy should be the route), as even if my income were to improve to the extent I suggested it might, I would still have minimal income to pay into an IVA or DMP.  Let’s see if they follow the call up in a few months time, and what their advice is then.  Let’s see what they say about the IVA option that could theoretically be open then.  Let’s see if they pick up on the fact that I msaid that one of my major creditors is HSBC: HSBC have a minimum dividend requirement of 40p in the £ in IVAs: this means that an IVA is not possible.  Let’s see if they send me down a route they should know cannot be achieved!
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