DMP

A Debt Management Plan (DMP)is an informal agreement between you and your creditors to repay your unsecured debts in full through a single monthly payment. A DMP provider collects one affordable payment from you and distributes it to your creditors. Unlike an IVA, bankruptcy or a DRO, a DMP is not a formal insolvency solution, and it isn't legally binding on your creditors.

How a DMP works

Your DMP provider reviews your income and expenditure and proposes a monthly payment to each creditor, usually asking them to freeze or reduce interest and charges. Creditors aren't obliged to accept these terms, though many do. You keep paying until your debts are cleared in full — there's no fixed end date, so how long it takes depends on your total debt and monthly payment.

The benefits of a Debt Management Plan

• Consolidation — Combine multiple debts into one monthly payment to a DMP provider.
• Interest and charges — Many creditors agree to freeze or reduce these, though none are obliged to.
• Flexible payments — You can review and adjust your payment if your circumstances change.
• No formal application fee— Most DMP providers don't charge an upfront fee, though some charge an ongoing management fee — check this before signing up.

Things to consider

• Informal and not binding— Creditors can still take legal action or decline to freeze interest, even while you're in the plan.
• No fixed end date — Because you repay debts in full, a DMP usually takes longer than an IVA and can run for several years depending on what you owe.
• Not all debts qualify— Secured debts can't be included, and you'll need to keep paying these separately.
• Credit file impact — A DMP may be noted on your credit file, and any provider fees reduce how much of your payment reaches your creditors.

Who a DMP is for

• Some spare income — You need at least a modest amount left each month after essential costs.
• No formal solution required— Suits people who don't need, or don't qualify for, a legally binding arrangement.
• No set debt limit— There's no minimum or maximum debt level set by law, though providers assess affordability.
• Ability to keep paying— Since there's no formal write-off, the plan relies on you maintaining regular contributions.

Speak to an experienced debt advisor

Everyone's situation is different, and the right debt solution depends on yours. Speak to one of our advisors for free, impartial advice on whether a DMP — or another solution — could work for you.