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What is a 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 repayment amount they originally agreed with their creditors.

With a DMP you make reduced monthly payments towards your debts. This means a DMP is useful 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.

Regardless of where you live, 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.

Video: An introduction to DMPs

Is a DMP suitable for me?

A DMP may be suitable for you if you can still afford to make payments towards your debts, after you create a budget to cover essentials such as food, utilities and transport.

Because you’ll be repaying your creditors less than your contractual payments each month your credit rating will be affected and your creditors may continue the debt collection process.

During your DMP you’ll find it difficult to obtain credit so you’ll need to stick to your agreed budget.

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Common questions about DMPs

How can I create a budget for a DMP?

You should contact a debt advice organisation to create a monthly budget to see if you can afford to make payments towards your debts.

Find out more about how to make a budget.

Are all DMPs free of charge?

Some debt management companies charge a fee to oversee plans. These fees are usually included in the monthly payment that you make to them. Paying a fee means that less money is going towards your debts each month, which can mean that a fee-charging DMP can take longer to pay off.

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

Are all debts are included in a DMP?

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

Priority debts, like most household bills, your 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 at the agreed amount. Find out more about priority debts.

Can my creditors still contact me when I'm on a DMP?

Yes, your creditors can still contact you during your DMP and can continue the debt collection process. Find out more about interest and creditor contact on a DMP.

Can I change DMP provider?

Even if your DMP company hasn’t closed down, you should still be able to change to another company, and we recommend doing this if you are paying fees to your DMP provider. If your DMP company has shut down you can switch your DMP to another provider. If this has happened to you, you can read more about what to do if your debt management company has closed down.

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?

DMPs with StepChange Debt Charity

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, we can assess your situation and recommend the very best solution for your circumstances.

Debt management plans are not suitable for all circumstances, but if a DMP is right for you we’ll help you every step of the way.

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