What is a Debt Management Plan?

A DMP (Debt Management Plan) is an informal agreement between a debtor and their creditors. DMP’s could help to reduce outstanding debts over a fixed period of time at a lower repayment level to help people regain control of their finances. To calculate how much they can afford to repay – the income and expenditure of the individual or household is taken into consideration including rent/mortgage, secured loans, utility bills, and essential living expenses (food & TV license etc.) and the surplus is the individual’s disposable income is then distributed to creditors (less any fees due) If the individual’s circumstances change, payments may be lowered or raised accordingly – so the plan is totally flexible and there is no binding contract. So if you’re experiencing financial difficulties and finding it hard to make your monthly repayments on any loans, credit cards, store cards or other unsecured debts then a Debt Management Plan could help you regain control of your finances.


There is an option to pay a fee for this service with a debt management company or you can seek assistance from the free sector, such as a charitable organisation.

Disadvantages of a DMP

  • Your creditors are not obliged to accept a DMP. These arrangements are informal meaning your creditors can change their mind at any time.
  • Your credit rating may still be affected
  • While such arrangements reduce your monthly repayments to make them affordable it usually means it will take longer to repay your debts
  • Creditors are not obliged to freeze interest or charges
  • Depending on the status of your credit file, your credit rating may be affected. Entries to your credit file remain for 6 years from the date they are entered

Advantages of a DMP

  • One affordable monthly contribution to your creditors.
  • Debt management is an informal arrangement that avoids the need for formal insolvency procedures such as an IVA, Bankruptcy or an DRO
  • By reaching agreement with your creditors a DMP may suspend actions against you such as county court judgments or an attachment of earnings
  • In many cases, creditors may freeze interest or charges
  • Your monthly debt repayments may be reduced

Reduce Your Debt Repayments and Regain Control

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