DEBT MANAGEMENT PLAN
Could a DMP help with your debts?
A Debt Management Plan (DMP) is an informal arrangement that allows you to make one affordable monthly payment towards your unsecured debts. Your payment is based on what you can reasonably afford and is distributed between your creditors.
DMP at a glance
Informal solution
A Debt Management Plan is not a legally binding insolvency solution.
One regular payment
Based on what you can reasonably afford to pay towards your debts each month.
Flexible
Payments can be reviewed if your circumstances change.
Repay your debts
You have to pay off 100% of the money owed to creditors before the plan ends.
What exactly is a DMP?
A Debt Management Plan (DMP) is an informal arrangement between you and your creditors to repay unsecured debts at a rate you can afford.
Instead of making separate payments to each creditor, you usually make one regular payment to your DMP provider, which is then distributed amongst the creditors included in your plan.
Important: Because a DMP is informal, creditors aren't legally required to accept your proposed payments or freeze interest and charges. They may also continue recovery action.
Potential benefits
✅ One affordable monthly payment
✅ Creditors are asked to stop contacting you
✅ Interest and charges may be frozen
✅ Flexible solution so you remain in control
Considerations
❌ It can take a long time to pay off your debts
❌ Interest and charges may still be added
❌ You must stick to the agreed payments
❌ Your credit rating may still be affected
Questions about DMPs
How long does a DMP last?
There is no fixed length for a DMP. How long yours lasts will depend on how much you owe, the amount you can afford to pay and whether interest and charges continue. Your plan should be reviewed regularly as your circumstances change.
Will a DMP affect my credit rating?
It can. If you're making reduced payments or have already missed contractual payments, this can be recorded on your credit file and may make obtaining credit more difficult.
Will interest and charges be frozen?
Creditors can be asked to freeze interest and charges, but they are not legally required to do so. This means interest or charges could continue to be added to some debts.
Can creditors still contact me?
Yes. A DMP is an informal arrangement and doesn't provide the same legal protection from creditors as some formal debt solutions. Creditors may continue to contact you and can potentially take further recovery action.
Can I change my payment?
A DMP is designed to reflect what you can afford. If your financial circumstances change, your budget and payment can be reviewed. You should tell your DMP provider as soon as possible if you're struggling to maintain payments.
Can I cancel a DMP?
Yes. A DMP is an informal arrangement, so you're not legally bound to remain in it. However, stopping your plan doesn't remove the debts and you'll need to consider how you'll deal with your creditors afterwards.
What debts can be included?
DMPs are generally used for non-priority unsecured debts, such as credit cards, personal loans, overdrafts and catalogue debts. Priority debts and secured borrowing normally need to be dealt with separately.
Will any of my debt be written off?
A DMP is primarily designed to repay your debts, rather than write them off. Creditors may make individual decisions about balances in some circumstances, but debt write-off isn't a standard feature or guaranteed outcome of a DMP.
How much does a DMP cost?
This depends on who provides your DMP. Free DMP providers are available, while some commercial providers charge fees. Any fees should be clearly explained before you enter a plan.
DMP Alternatives
We'll help you understand the solutions available & what's right for your situation
Individual Voluntary Arrangement (IVA)
Combine your debts into one affordable monthly payment with legal protection from creditors.
Debt Relief Order
(DRO)
A free debt solution that can freeze interest and write off qualifying debts.
Bankruptcy
(BKY)
A formal debt solution that can help clear unaffordable debts and give you a fresh financial start.
To find out more about managing your money and getting free advice, visit Money Advice Service, independent service set up to help people manage their money.