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What is a DMP?

Debt management plans: Your questions answered

You may have questions about how a debt management plan (DMP) would work for you.

We can help you understand:

  • How long a DMP lasts
  • How much you need to pay
  • How it affects other aspect of your life

How long does a DMP last?

The duration of your DMP depends on:

  • How much debt you owe
  • How much you can afford to pay to your debts each month

Your DMP lasts longer if:

  • You have a high amount of debt, and
  • You make low monthly payments

DMPs are flexible. You can make your DMP term shorter if:

  • You manage to increase your income and monthly DMP payment, and
  • You find ways to spend less in your budget
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How is a monthly DMP payment worked out?

DMP providers work out how much you can pay towards your debts by looking at your budget.

They make sure:

Any leftover money goes to your monthly DMP payment.

Debt advice charities do not charge fees for DMPs. But, some companies will.

The monthly DMP payment must leave you with enough money to:

  • Cover your living costs
  • Have a reasonable quality of life for you and your family

Is a DMP like a consolidation loan?


A DMP is a payment arrangement based on what you can afford after priority bills and living costs.

A consolidation loan is a form of credit. You use it to pay off your existing debt.

Is a DMP legally binding?


  • You can stop your DMP at any time
  • You do not make a legal commitment to a DMP

You may need to sign a DMP agreement form.

  • This lets your DMP provider contact the people you owe
  • It is not legally binding

Will a DMP affect my credit rating?

Debts included in your DMP can have a 'payment arrangement' note added. This is also called a 'DMP flag'.

The people you owe only add this if they accept what you pay them through the DMP.

There is no specific place in your credit report that notes if you are on a DMP, but:

  • DMP payments are based on what you can afford
  • This may be less than you originally agreed
  • You credit rating is affected any time you pay less than you first agreed

The people you owe might 'default' your account after a few months of your DMP.

A default stays on your credit file for six years.

Can my creditors charge fees or add interest during a DMP?

The people you owe may agree freeze interest and charges during your DMP. But there is no guarantee.

Most know interest and charges make it harder for you to pay your debts.

They may end the original credit agreement if your situation does not improve. They may stop further interest and charges now too.

I am not in debt. I just want to make one payment to my debts each month.

A DMP may be a good idea if you are struggling with monthly debt payments. Even if you do not think you are in trouble yet.

Warning signs of a potential debt problem could be:

A DMP may not be the right thing if you have no problem making your payments.

DMPs can show up on your credit file as a ‘payment arrangement’.

  • Some creditors might think you are struggling with debt when you are not
  • This can cause problems if you try to apply for credit in the future

There may be other ways to manage your finances.

For example, if your bills and debt payments are spread over the month, it might be better to:

  • Change everything to be paid on the same day, like the 1st of the month
  • Change the dates so they fall in the same week, like the first week of the month

Ask the people you owe if you can move the payment dates on your debts.  Make sure this will not affect your credit rating first

Why do I need to review my DMP payment every year?

The Financial Conduct Authority (FCA) has ruled that all DMP providers must:

  • Conduct a plan review with their clients
  • At least once a year

This is to make sure that:

  • A DMP is still the best option for you
  • Your monthly payment is a realistic reflection of what you can afford

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Can I skip a DMP payment to pay for Christmas?

DMP providers cannot pause your DMP payments for:

Your budget includes sections for:

  • ‘Sundries and emergencies’
  • Gifts
  • Savings
    • This money should be put aside each month
    • It is saved for yearly expenses like Christmas

Will my DMP be cancelled if I miss a payment?

Life happens. You may need to miss a DMP payment because of:

  • Unexpected costs
  • A sudden change

These might be short or long term.

Let your provider know if you cannot make a payment.

They may be able to:

  • Extend the term to accommodate the missed payment
  • Give you advice on how the missed payment could impact you
  • Review your budget to see if another solution is better for you now

Your DMP is at risk of being cancelled if you miss payments a lot.

Any conditions of your DMP are stated in your agreement.

Can my DMP financially affect my partner or other people living with me?

Your DMP will not affect the people you live with unless:

  • You share joint financial products or
  • You have joint debts
  • This could be anything in both your names like:
    • Loans
    • Bank accounts
    • Household bills

Could I be made bankrupt even though I am on a DMP?

The people you owe can only make you bankrupt if:

In England, Wales, or Northern Ireland

You owe them more than £5,000.

In Scotland

You owe them more than £3,000.

It is very rare that they do this. There are expensive fees, which is not worth the risk since they do not know how much money they would get back.

The people you owe must send you a formal demand for the money to start the process.

  • Call your DMP provider if you get something like this
  • They will advise you what to do next

DMPs with StepChange Debt Charity

DMPs are not always the right choice.

Get free, impartial debt advice to be sure.