There are approximately 400,000 people in commercial Debt Management Plans (DMP) in the UK, according to a report by the FCA in 2016, and lenders are improving the products they provide for borrowers in an active DMP, so how do you make sure that your clients aren’t missing out?
A DMP is an agreement between an individual and their creditors to pay debts and is typically used when borrowers can only afford to pay less than their contractual repayments each month.
Borrowers can arrange DMPs themselves, but they will generally approach a debt management company that will arrange a plan with creditors, often for a fee.
The debt management company will work with the borrower to understand full details of their income, financial commitments and household expenses to work out a realistic monthly payment. The company will then attempt to agree a reduced monthly payment with each of the creditors.
With a DMP, a borrower should ultimately repay the debts in full, and a number of lenders take the view that a borrower who has successfully maintained payments on a plan has demonstrated a determination to rehabilitate their finances.
There are therefore a growing number of options for borrowers in active DMPs and we work with lenders that are able to lend up to 90% or even 95% LTV to customers in these circumstances.
So, if you have clients in a DMP, it’s worth picking up the phone to Brightstar as we could have access to the right solution for them, even if they have a small deposit.
FIND OUT how we helped a client with benefit only income – read our case study of the month!
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