With a cascade of information relating to borrowing money and the requirements of various lenders, it can sometimes be confusing when you're looking at your potential for obtaining a mortgage from a lender. Given the precarious nature of the financial world over recent years, many people have found themselves in debt and are now left wondering whether any lender will lend to them again.
Mortgage lenders are having to adapt to the times and are now increasingly considering offering mortgages to those who have been in debt and even to those who have been made bankrupt or have had their home repossessed in some cases.
As a consequence of the financial hardship many are currently facing, debt management plans are a fairly common occurrence in the modern world. Our expert mortgage brokers are able to advise you as to whether you will be able to obtain a mortgage with a debt management plan history. There are many different factors that are taken into account by lenders before approving a DMP mortgage.
A debt management plan is an agreement entered into between a debtor and creditor in order to pay off all of the debts owed. They are usually entered into when the debtor is only in a position to pay their creditors a small payment every month or if the debtor has financial problems but will be in a position to make the repayments within a few months. Such plans can be organised by yourself directly with the creditors they may also be carried out via a licensed debt management company who would normally deal with everything on your behalf for a fee.
This would include setting up the plan and working out the monthly payments owed. They would obtain all the details regarding the financial situation including the assets, debts and income of the debtor and the details of the creditors in order to proceed with setting up the plan. The company will also contact the creditors and request that they agree to the suggested plan. The creditors are not, however, obliged to do so. If a debt management plan is arranged through a company, the debtor has to make the regular payments direct to the debt management company and the company will divide the payments out between all the creditors.
Even if a debt management plan is entered into, the creditors will still have the option to ask the debtor to pay the full outstanding debt at a later stage in time and are therefore still entitled to take proceedings to recover the outstanding debt even if the debtor is sticking to the plan and continuing to keep up with the payments.
Debt management plans can only be set up in respect of ‘unsecured’ debts i.e. debts that are not guaranteed against your property and it is possible for them to be cancelled if repayments are not maintained in accordance with the plan.