A question often asked by anyone who is on a Debt Management Plan (DMP) is whether they are allowed to go on holiday. The answer is a clarified – yes, you can go on holiday if you don’t spend beyond your means.
When you first set up your Debt Management Plan, you’ll need to create a clear budget that details all of your income and expenditure. There are reasonable expenses that will be permitted in the expenditure column, including for all essential living costs such as regular dental treatment and a (reasonable) clothes budget, down to things like haircuts or basic leisure costs. A small amount, to put aside for emergencies and contingencies, is also likely to be accepted.
A Debt Management Plan is designed to help your creditors receive as much money as you can reasonably afford to pay, without completely pausing your entire life. However, certain expenses cannot be included in a DMP expenditure budget, and holiday costs are one of those.
Holidays are considered, by creditors, to be a luxury. A creditor would not be pleased if you were spending large sums on a family break while they are receiving a smaller amount of their monthly payments than they would normally be due.
H2: How to holiday on a DMP
This doesn’t mean you can’t ever go on holiday during a Debt Management Plan. Rather you’re just unable to include it as a regular expenditure, meaning you’re unlikely to be able to afford more costly holidays during your plan.
You are permitted to go on holiday as long as you’re living within your means. Consider a self-catering holiday that doesn’t need you to pay out huge sums or collect vouchers from newspapers to enable you to get a value deal on a break that would normally cost a lot more money. As long as you’re sensible with what you can afford, then if you wish to use your contingency budget on a holiday your creditors have no means to stop you.
If you manage to save small amounts of money whilst you’re on a debt management plan, that enables you to book a cheaper holiday for your family, then the only important consideration is that you don’t spend beyond your means.
If you end up living extravagantly while on your holiday, and either put yourself into more debt or you make it so that you cannot afford your regular DMP monthly payment, then your creditors may take further action to seek the money that they are owed.
It’s also worth remembering that your budget needs to be affordable for the duration of your plan. If you’ve built up a small contingency pot you have to consider whether taking a holiday is the right decision for you. You may require emergency funds, and if your budget becomes stretched then the likelihood of missing a payment and failing your DMP could be increased. You should also consider how using any extra money could impact your DMP. Putting in extra funds to your DMP means it may be paid quicker.