Debt Management Plan FAQs

A Debt Management Plan (DMP) is an informal agreement between you and your creditors to pay all of your debts. There is no fixed duration, and you will continue to make payments until all debts are paid in full- there is no debt forgiveness.

If you’re on a DMP you make reduced monthly payments towards your debts. This means a DMP is suitable for people struggling to keep up with their normal debt payments but who still have money available to them after all essential living expenses are paid.

A DMP may be suitable for you if you can still afford to make payments towards your debts, after you create a budget to cover essentials such as food, utilities and transport.

A DMP is usually arranged on your behalf by a third-party provider, for example a debt charity or debt management company. This means you’ll make a single monthly payment to the DMP provider and they’ll contact all of your creditors and send each of them a share of your payment every month.

Unsecured debts will be included in your DMP. This includes things like personal loans, store card debts and overdrafts.

Priority debts, like most household bills, your mortgage or a debt where court action has already been taken, won’t usually be included in a DMP, and you should keep paying these at the agreed amount.

Creditors can still contact you during your DMP and can continue the debt collection process. Creditors can still take action against you during the DMP and frozen interest & charges on debts is not guaranteed.

A DMP isn’t specifically registered on your credit file but the reduced payments could impact on a few different areas of your credit file. Details of court action, defaults or missed payments will be removed six years from the date it happened, even if the debt hasn’t been fully repaid.

You shouldn’t take out any further credit while you’re trying to repay your existing debts through a DMP. Doing so could be a “breach” of your DMP agreement, as you’re not in a position to make the minimum payments on the debts you already have.

Your credit history is likely to be affected by being on a DMP. However, it‘ll not affect the people that you live with unless you have joint financial products or joint debts. This would be something like a loan, bank account or household bills that are in joint names.

If this happens there’ll be a ’financial association' linking your credit files. This means your record of making reduced payments may affect the other person’s credit file and their ability to get credit.

Unlike bankruptcy, DMPs are available across the UK. So regardless of where you live in the UK, if you’re struggling to keep up with payments to your debts, a DMP could help you to get your financial situation back on track.