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Changing debt management plan provider
If you're not happy with the provider of your debt management plan (DMP), you might consider moving to another provider. This may not always be straightforward.
This page explains what to think about before moving to another DMP provider and how to go about it.
Can you switch DMP providers?
As DMPs aren’t legally binding in any way, you're free to cancel at any time. So if you choose to switch provider you should be able to do this easily. However, usually you'll need to cancel your old DMP and set up a brand new one with the new provider, although some providers will manage the whole process for you.
Some providers will want to explore your situation as a whole with you before they set up the DMP. This is to ensure that a DMP is still the best solution for you and to consider other options.
Reasons for switching
There are many reasons why you might want to change DMP providers, including:
- the fees for your DMP mean it's taking longer to pay off and you want a free provider instead
- you want a provider who'll give you free debt advice as well as managing your DMP
- you're not happy with your provider for some reason.
If you want to switch because you're not happy with your provider, it's worth speaking to them first to see if the problems you have can be resolved. DMP providers have to deal with complaints promptly and fairly, so this may be the easiest route to sort out your problems and would save you the bother of setting up a new plan.
Things to think about before you switch
Moving from one DMP provider to another isn't always straightforward. Any of the following could happen:
- delays in getting details of your debts while the old provider still has your paperwork
- gaps in payments, meaning your creditors may add interest or late fees to your debt
- your creditors might not agree to the new DMP
- your creditors might start adding interest to your debt in the short term.
In order to avoid these happening, you might want to stop your payments to your existing DMP and make payments directly to your creditors instead while the switch is taking place.
How to switch
If you want to change to a new DMP provider, follow these steps:
Step one: check what your existing agreement says about cancelling
Make sure you understand what your existing agreement says about cancelling and whether you'll get a refund of any of the fees you've paid. You may have to give a certain amount of notice, such as one month.
Step two: ask your current DMP provider for information about your finances
Ask your existing DMP provider for details of all the accounts that are in your DMP, including the amounts you owe and the reference numbers.
Step three: cancel the old DMP
Contact your existing provider to let them know you want to cancel and giving them the amount of notice they require. It's a good idea to do this in writing and over the telephone.
Remember, you might want to make payments directly to your creditors after this, just to make sure there's no gap in your payments.
Step four: choose a new DMP provider
It's a good idea to choose who you want to be your new provider before you cancel the old one. This should mean that you'll be able to set up your new DMP more quickly. Remember to think carefully and do your research before choosing a new provider, to make sure you choose the right company for you.
It's a good idea to contact the new provider to find out how quickly they can set up your new DMP and to check what information they'll need.
Step five: set up the new DMP
Make arrangements with your new provider to get your new DMP set up as quickly as possible.