Considering a DMP or bankruptcy?

With a debt management plan (DMP) you pay back your debts at an affordable rate, over a reasonable period of time, usually no more than 10 years. You make a single monthly payment, based on what you can afford, which is shared across your creditors.

Your creditors don’t have to agree to this, as it’s an informal agreement and they don’t have to agree to stop contacting you. However, we’ve found that most creditors will accept DMP payments. Many will also freeze interest and charges for a time while you deal with your debt problems.

Find out more about getting a debt management plan.

Bankruptcy is a form of insolvency that allows you to write off a range of unsecured debts, including credit cards and utility arrears. It’s usually suitable if you’re not able to pay back your debts in a reasonable amount of time.

You have to pay a fee to go bankrupt. The fees and administration costs vary depending on where you live in the UK.

The official receiver will oversee your bankruptcy, confirming which debts can and can’t be written off and if any assets may be used to repay your debts.

Bankruptcy usually lasts for 12 months. This could be extended if extra restrictions are imposed.

Find out more about how bankruptcy works.

You should always get free and impartial debt advice before going ahead with any debt solution, to check it’s the best one for your individual circumstances.

To learn which debt solutions are available to you, you’d be asked a range of questions to find out:

• Who you owe money to
• How much you owe
• What types of debt you have
• Whether you have assets or a job that could be affected by some solutions
• How much you can reasonably afford to pay towards your debts
• Whether your circumstances are likely to improve in the next few years
• If you would be happy for some of your debts to be written off by your lenders, rather than you paying them back

As part of your debt advice session, you would add details about your income, spending and debts into your monthly budget. Then you’d be able to see whether there is a ‘surplus’ left over for making debt repayments after you’ve dealt with your household spending.

If you have a surplus, this could be used to make payments through a DMP. There may be other debt repayment options that you can consider, depending on your circumstances.

If your budget shows that you aren’t in a position to repay your debts in a reasonable amount of time, an insolvency solution may be recommended to you.

When you’ve completed your debt advice session with us, we give you a ‘personal action plan’. This will include guides to setting up any debt solutions we recommend.

We’re on hand to support you as you deal with your debts. If a debt management plan is right for you, we can set up and manage your DMP for you. Frequently asked questions about debt management plans.

If bankruptcy is recommended to you, you can begin to apply.

• England and Wales: You can complete your application online without the need for a court visit
• Northern Ireland: You apply online and then attend a court hearing

Read our guide to going bankrupt.