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Debt Management Plan


What is a Debt Management Plan?

A Debt Management Plan (DMP) is designed to help anyone who may be struggling or in arrears with money they have borrowed. Any debts which are managed through a DMP will ultimately be paid off in full providing payments are maintained throughout its lifetime.

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What you need to know:

  • Payments in a DMP are normally calculated on what you can afford and not on what you owe. Charges and interest may be frozen or reduced but this will depend on your creditor. Payments to creditors may be reduced, which could in turn increase the length of time taken to repay outstanding debts or arrears to creditors.
  • Any communication you receive from creditors included on a DMP is normally managed by your DMP provider.
  • There are some debts which are excluded from a DMP. These include fines, tax, student loans, current council tax, selected benefits, gas and electric utilities arrears and child support.
  • We can, depending on circumstances, also include social fund loans within a DMP. Only unsecured debts can be included on a DMP.
  • Managing debts through a DMP will have a negative impact on your credit score as you won’t have maintained contractual payments with your creditors once your debts are managed via a DMP.
  • A credit report may uncover debts being managed through a DMP. The time this will remain on your credit file for will vary based on how long the DMP lasts. On a DMP your creditors will normally send correspondence to the firm managing the plan. If you miss or make late repayments, then your creditors may contact you directly to discuss it further.
  • If you try to obtain credit in the future it may be at a less competitive rate, or at an above average rate, because of the impact a DMP will have on your credit score.
  • The process begins with a review of your financial income and expenditure. This is normally done by a licensed debt management company.
  • Once completed they will have an idea of what you can pay towards your existing debts. This is after you have paid essential bills such as rent or mortgage, utilities and council tax. They will hold discussions and negotiate with your creditors with a view to reducing monthly payments which, if successful, may increase the length of time taken to repay what you owe to your creditors.



A Debt Management Plan is designed to allow you to pay what you can realistically afford to your creditors each month. Generally creditors will agree to accept reduced payments and freeze or reduce interest charges.

  • Creditors may freeze interest and charges
  • If you’re struggling to meet your normal payments to creditors, a DMP allows you to pay an affordable monthly contribution.
  • A DMP is flexible. You can terminate your plan at any time.
  • A DMP is an informal solution and should ideally provide for you to clear your debt in less than 10 years. If the plan looks like it could take more than 10 years, a DMP may not be appropriate unless you feel your circumstances are likely to change which will enable you to clear your debt in a 10 year period.
  • Creditors may stop further action.



  • A DMP is an informal debt solution and creditors are not obliged to freeze interest and charges. Some creditors may agree to reduce interest charges rather than freeze them. Continued charges could result in it taking longer and costing you more to repay your debts.
  • As a DMP is an informal arrangement, there are certain debts such as arrears of council tax which cannot be included due to the risk of action against your assets. There are other solutions such as an IVA which can include arrears of priority bills.
  • A DMP could have a negative impact on your credit file. Creditors can issue default notices which will remain on your credit file for 6 years. Your ability to obtain credit will be affected.
  • We cannot guarantee that creditors will not take legal action or that they will stop collection activity. Such action could result in a judgment and could potentially lead to a charging order if you have a property.
  • If you cancel your DMP, creditors could end payment arrangements previously agreed and charges could be reapplied to your debts.

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