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This solution is available throughout the UK.

How can a change of circumstances affect a DMP?

Debt management plans (DMPs) often run for a number of years, so along the way it’s likely you’ll experience a change in circumstances.

Here we’ll explain what to do when something happens that could affect your DMP.

What changes could impact my DMP?

Whether they’re planned or not, lots of life changes could happen that alter your income or living costs. These changes could affect the amount you can afford to pay to your debts through your DMP.

These changes could be due to:

  • a salary increase or reduction
  • redundancy
  • retirement
  • starting a family
  • moving home
  • starting or ending a relationship
  • starting or finishing study
  • illness

I’m worried about telling you I need to change my DMP

By the time your first plan review comes around, your creditors will be used to receiving your DMP payments. You’ll probably have seen a reduction in the amount of letters or calls from your creditors. Also, interest and charges should have been stopped or reduced (although of course we can’t guarantee this).

We must review your DMP via telephone or our OnlineDMP service at least once a year, or when you’ve told us you’re expecting a change in your situation. We do this to make sure it’s still the best option for you and we’ll work out a DMP payment that’s affordable for you.

If we can’t complete your budget review, we can’t be certain that a DMP is still the best option for you. In this situation, we would eventually have to close your DMP. Your DMP can be altered at any time based on your circumstances, and your creditors understand that things will change from time to time.

I need to pay less to my DMP, will it be cancelled?

If your income goes down or your living costs go up you may find you don’t have as much left over to pay towards your DMP. Making payments that you can’t afford could end up making your situation worse.

If the amount you can afford to pay to your plan is not enough to pay off your debts in a realistic time, a DMP may not be the best way to deal with your debts now. If this happens, don't panic. We’ll discuss all the options with you, and help you work out whether to continue with your DMP or look at a different debt solution.

Will my creditors be annoyed if I make changes to my plan?

Your creditors expect us to review your budget at least once a year. They understand that DMP payments have to be based on what you can afford, and that this might change over time.

If you do need to reduce your payments, your creditors may want to see a copy of your budget. We’ll provide them with this so they can see what’s changed, and that your DMP payment is still the most you can realistically manage.

In some cases, if your DMP payment reduces, a creditor may take action, such as passing your debt to a collection agency or sending you a default notice. If anything like this happens, just let us know.

Paying an amount to your DMP that you can’t afford would end up causing bigger problems in the long term, as you would find it difficult to cover your essential living costs.

My income has increased. Do I need to pay more to my DMP?

A pay rise is usually good news. If your income has gone up, we’ll make sure this is reflected in your budget. If you can afford to increase your DMP payments, this means you’ll be able to pay off your debts faster.

But this might not always be the case if your living costs have changed. For example, your income may have gone up but bills, travel costs or other household expenses may have increased as well. This is why it’s important to look at your whole situation when reviewing your budget. We’ll never ask you to increase your DMP payments if you can’t afford to.

While we always consider a pay increase on an individual basis, here are some general suggestions for anyone on a DMP who find themselves earning a bit more, or receive a lump sum of money. It’s always best you contact us so we can talk you through the best options for your situation:

Priority debts include arrears on household bills such as council tax, mortgage arrears or utility bills, or court debts such as fines or parking tickets.

We may have included priority debts in your DMP so they get a share of your monthly payment, or we may have advised you to continue paying them direct. In either case, you should consider using any increase in your income to pay these off faster, or if you have a lump sum of money available, consider paying them off in full.

If you don’t have priority debts, consider putting any extra money you have towards any essential expenses you wouldn’t normally be able to afford, like repairs or replacement appliances.

It’s also worth checking if there are any annual costs which you could pay off in full if you have a windfall. Good examples of this are contents insurance or car insurance. Paying these off for a full year in one go can often be cheaper than paying monthly.

If you’re on a DMP with us, your budget may include an amount each month to save for ‘sundries and emergencies’. Then, should anything unexpected happen, such as an expensive vet bill or vehicle breakdown, you’ll have money already set aside to go towards these costs.

If you’re not already saving something for emergencies, an increase in income is a good time to start. Alternatively, if you get a lump sum of money, it could be wise to put something into a savings account to cover any unexpected costs in future.

If you don’t have any priority arrears or essential expenses to pay for, you could pay any extra money you have to your remaining creditors. If the extra amount is a larger lump sum, you may be able to make full and final settlement offers to your creditors. This means paying a lump sum of money in return for them writing off the rest of the debt.

Our Settlement Service team can take a look at your situation and let you know if it’s possible to settle your debts in a way that’s fair for all concerned.

If the money you’ve received isn’t enough to settle all of your debts, you could use it make a one-off higher payment to reduce your debts. This will reduce the total time it will take to clear your debts. You could do this in two ways:

1. Share out the extra money fairly across all of your creditors

You can do this by paying extra into your DMP, and we’ll share it out for you. Call or email us if you’re paying an extra amount into your plan so we know the larger payment isn’t a mistake.

2. Pay off one or more individual debts

We generally recommend treating all debts fairly, but if one particular creditor is causing problems, for example by continuing to add interest, you may decide you’d prefer to pay them off in full.

You may also want to do this if one of your creditors has offered to settle the debt for a reduced amount. Contact us first if you plan to do this so we can discuss the pros and cons, as in some cases showing preferential treatment to one creditor by paying them off could cause problems, especially if you are considering an insolvency solution like bankruptcy in the future.

We would strongly recommend that you get any agreed settlement figure from a creditor in writing for your records. This is the best way to prove that a settlement figure was agreed on should the creditor change their minds.

I’m expecting some extra income - what should I do?

If you’re expecting extra income, for example from an upcoming sale of a house, released funds from a relative’s estate, or other means, you may want to look into your options now.

While our debt advice is based on what your financial situation is today, we’re mindful of what your potential needs could be in the months or years ahead. We can discuss what your options are likely to be when you receive the funds, although without knowing the exact date and amount involved, we won’t be able to give you full advice on how a future sum will affect you. When you receive these funds get in touch again so we can review your budget and options.

How can I let you know about changes to my DMP?

Easy, just give us a call and talk to our team. You can also update your plan with any changes by logging onto OnlineDMP. Please bear in mind that significant changes via OnlineDMP may mean that you’ll need to call us to discuss further options. 

Helping you become debt free...

“I wish to thank your staff for all the great help they gave me when I was in so much debt.
They were a pillar of support to me.” (Leslie, Essex)

Foundation for Credit Counselling Wade House, Merrion Centre, Leeds, LS2 8NG trading as StepChange Debt Charity and StepChange Debt Charity Scotland. A registered charity no.1016630 and SC046263. It is a limited company registered in England and Wales (company no:2757055). Authorised and regulated by the Financial Conduct Authority.

*This is the average rating of our service based on the StepChange reviews on Feefo by DMP and DRO clients three months into their solution.

© StepChange Debt Charity 2018