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i This solution is available throughout the UK.

Debt management plan (DMP)

What is a debt management plan?

A debt management plan (DMP) is a debt solution that can be used to help people pay back their debts at an affordable rate. It’s normally suitable for someone struggling to meet the original repayment amount they’ve agreed with their creditors.

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 debt management plan (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.

Sometimes, people self-manage DMPs, but this depends how confident you are in dealing with your creditors.

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.

Most debt management companies that offer DMPs will charge a fee for this service. However as a charity, we offer DMPs for free.

Watch: An introduction to DMPs


How does a DMP work?

If you’re thinking about starting a debt management plan, you may have some questions about how DMPs work.

The first thing you need to do is work out a realistic budget you’re able to live on. This should include all your living costs, and payments to your household costs such as rent or mortgage payments, utility bills and food shopping. But it shouldn’t include the payments you’re making to your debts.

Your budget will show you how much money you've actually got available to pay your unsecured debts after all your essential costs are paid.

Once you’ve got an accurate budget, your DMP provider will be able to arrange a monthly payment to your creditors using the amount you have left over after your living expenses and priority bills have been covered.

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What debts are included in a DMP?

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

Priority debts, like a 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 direct at the agreed amount.

When we work out your DMP payments we’ll ensure you can still afford the payments to any priority or court debts. And if you have any problems dealing with your priority debts we can help.

Things to consider when applying for a DMP

It’s important to remember that a DMP has risks associated with it:

  • It’ll take longer to repay your debts as you’ll be making reduced payments
  • Interest or charges could be added to your debt, making the total you repay higher
  • Your credit file could be affected
  • There’s no guarantee that a creditor will accept the DMP offer
  • Further action could be taken by creditors to get you to repay the debt, for example passing the debt to a collection agency or starting court action
  • Creditors may continue to contact you during your DMP

Will a DMP stop interest and charges being added to my debts?

No. No DMP provider can guarantee that a DMP will stop your creditors adding interest and charges to a debt.

In most cases, the contract you signed with a creditor allows them to add interest and charges, and they can continue to do this even if you’re making reduced payments through a debt management provider. However, in practice most companies will recognise that when you’re in financial difficulties, adding further interest or charges will only make things worse, so the majority of creditors will consider stopping these.

What happens if my situation changes when I’m on a DMP?

Most DMPs are flexible. If your situation changes you should let your DMP provider know.

Do my creditors have to accept the debt management plan offer?

No but that doesn’t mean they can reject the payments being made to them. If a creditor doesn’t accept the payments being offered, they’ll often pass the debt to a collection agency to deal with, and they may be more willing to agree to the DMP payments.

Choosing a DMP provider

We’d always encourage you to choose a fee-free DMP company. This way, all your money is going towards repaying your debts rather than on extra fees.

However, whether you decide to choose a fee-free DMP company or a fee charging DMP company, it’s still important to do some research first.

Before you decide on a DMP company, some of the things you should check first include:

  • Is the DMP provider authorised by the FCA? You can check by entering their name or postcode online
  • Does the DMP provider look at all the possible debt solutions? A DMP may not be right for your situation
  • What fees, if any, are involved and are they paid upfront or as part of your monthly payments?
  • What happens if your circumstances change and you need to cancel or change your plan? Is there a fee associated with that?

Can I change my DMP provider?

If your DMP company has been shut down you may be wondering if you can switch your DMP to another provider. If this has happened to you, you can read more about what to do if your DMP provider has closed down.

Even if your DMP company hasn’t closed down, you should still be able to change to another company. In some cases, you’ll need to check your DMP agreement to see if there are any charges or a notice period involved with this.

If you’d like to switch to a free DMP with us, this is something we can help you with, however we’ll need to make sure that it’s the right solution for you first. You can find out more about this by calling our free Helpline or using our online debt advice tool.

Free DMP advice

Debt management plans are not suitable for all circumstances, but we can help with all kinds of alternative debt solutions. Through our online debt advice tool, Debt Remedy, we can assess your situation and recommend the very best solution for your circumstances.

We're rated

4.8 out of 5
Read reviews of StepChange » Av. ratings for our service by DMP/DRO clients after 3 months.

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 2017