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Figures released by R3 show that a quarter of Debt Management Plans (DMPs) will
last ten years or more, even though a DMP is meant to be a short-term repayment
plan between an individual and their unsecured creditors.
R3 President, Peter Sargent explained: DMPs can play an important role in
offering a manageable solution to individuals who are able to pay back their
debts.
However, the sheer length of some plans indicates that the amount of debt these
individuals have is too large for a DMP. By entering into these inappropriately
lengthy plans people become slaves to their debts.
In addition, the figures show that a third of those who are currently bankrupt
or in an IVA used to be in a DMP.
The volume of those who go from DMPs into a formal insolvency procedure suggests
that, in some cases, DMPs prolong distress when another procedure would have
been more appropriate to start with.
R3s survey also reveals that a fifth of those in a DMP say that they were not
asked for proof of their income or expenditure before their plan began.
"It is incredible that organisations set up DMPs without these vital details",
added Sargent.
"If this information is not verified at the start the monthly payments may be
set too high dooming the plan from the outset".
Source:
Getting Paid
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