Creditors may contact the individual, and may or may not stop interest charges. This may increase the total amount that a debtor owes. Legal action by creditors is another potential disadvantage of a DMP.

Using a DMP may come across as being a feasible plan for an individual, in the event that he has some surplus money available each month. This is after paying priority costs, such as rent, food and utility expenses.

A DMP does lay effects over one’s credit file and score. The underlying reason for the same is that a debtor uses a DMP to pay lesser than the minimum repayment amount that he initially agreed to pay when he took the debt.

A DMP isn’t registered upon the credit files as such, but it could lay an impact over certain areas of a credit file. Details pertaining to aspects such as court action, missed payments, defaults will be removed six years prior to their occurrence. This would be even while the debts have not been paid in totality.

One of the primary advantages of using a DMP is that in the event that one falls behind on house hold expenses, arrears can be made and they can be added to the DMP. They are then a part of the monthly DMP payment.

It is best to clear the arrears as soon as possible and there are cases wherein the financial institutions help debtors clear the arrears. As arrears are cleared, it implies that amount being paid towards unsecured debts increases.

Paying the amount to a single financial institution who manages the DMP for a debtor is a more stress free alternative, over managing payments for multiple creditors.