In today’s blog we’ll touch on key points of information to know about each tool. Let's get started:
1. What are each of these tools?
Debt Management Plan (DMP)
A debt management plan is an informal agreement with the creditors you owe money to, agreeing that you will pay back the money but in smaller amounts over a longer timeframe, based on what you can afford.
Incredible App
Incredible is an app that helps you streamline your existing process for tracking, managing and repaying your credit cards
2. Who are they suitable for?
Debt Management Plan (DMP)
The most common use cases for a DMP is when someone still has money left over at the end of the month after budgeting to cover essentials like food, utilities and transport, but doesn’t have enough to pay the minimum agreed repayment amount as set by their creditor
Incredible App
Anyone who ticks the below criteria can use Incredible:
- is an iOS user
- has any of the below credit cards:
Amex
Bank of Scotland
Barclaycard
Barclays
Halifax
Lloyds
M&S Bank
MBNA
Nationwide
Santander
Tesco Bank
Virgin Money
3. How does this change your relationship to who you owe money to?
Debt Management Plan (DMP)
While creditors don’t have to agree to the DMP, in most cases they will. Many will also freeze interest and charges while you’re dealing with the debt problem.It’s important to note, this does not mean the creditors have to agree to stop contacting you.
Incredible App
Using Incredible doesn’t change your relationship to your creditors at all. You are still responsible for ensuring there is money available to make the necessary payment each month and are still responsible for repaying your debts.
4. How they're similar
Debt Management Plan (DMP)
- You can make a single payment
- It simplifies the process of tracking your obligations
Incredible App
- You can make a single payment
- It simplifies the process of tracking your obligations
5. How they're different
Debt Management Plan (DMP)
- You make a single payment, based on what you can afford, which gets shared across your creditors
- Different types of unsecured debts will be included in your DMP e.g. personal loans, credit card debts and overdrafts
- You’ll repay your creditors less than your contractual payments each month, your credit rating could be affected and your creditors may continue the debt collection process
- During your DMP you could find it difficult to obtain credit so you’ll need to stick to your agreed budget
Incredible App
- You can make a single payment in Incredible to all your connected credit cards, but it’s not possible to pay less than the minimum amount due in that period
- Any funds paid above your minimum repayments are optimised to achieve maximum time and interest savings
- At the moment, only credit cards can be managed through Incredible
- Making repayments through Incredible itself does not impact or influence your ability to obtain credit. But not keeping up on repayments could
- You can see the impact of, and make, overpayments without leaving the app
6. How much they cost?
Debt Management Plan (DMP)
- Some companies who offer DMPs charge a fee to oversee the plan and this fee is usually baked into the monthly payment you make to them. Some companies, like charities, offer DMPs for free.
Incredible App
- You only pay for Incredible when you save money through Incredible, whether through smarter repayments or future offerings that save you interest. The amount is based on total savings made and we only win when you win.
7. Where can I learn more?
Debt Management Plan (DMP)
There are several places online to find out more information about Debt Management plans, some notable sources are:
- StepChange Debt Charity*
- National Debtline**
- Citizens Advice***
Incredible App
You can download the app from the App Store or you can read more on our homepage at www.getincredible.com
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*https://www.stepchange.org/how-we-help/debt-management-plan.aspx
**https://nationaldebtline.org/fact-sheet-library/debt-management-plans-ew/
***https://www.citizensadvice.org.uk/debt-and-money/debt-solutions/debt-management-plans/debt-management-plans-explained/debt-management-plans-what-you-need-to-know/
