Debt Management Plan (DMP)

What is a DMP?

A Debt Management Plan helps you repay unsecured debts at a rate based on your budget. A provider typically distributes one monthly payment among your creditors. Unlike an IVA, it is not a legally binding insolvency process.

How repayments are worked out

An adviser reviews income and essential spending to work out what you can afford. The plan can be reviewed if circumstances change. It normally continues until the included debts have been repaid in full.

What creditors can decide

Creditors may agree to lower payments or freeze interest and charges, but they are not obliged to do so. A DMP does not automatically stop legal action or creditor contact.

Important things to consider

• Paying less than your contractual repayments can affect your credit rating.
• Repaying over a longer period may increase the total amount repaid, especially if interest continues.
• Some providers charge fees. Free DMP services are also available.
• Priority bills and secured debts usually need to be managed separately.

Check whether it is suitable

A DMP may suit someone who can repay debts over time, but the duration and cost should be realistic. Ask an adviser to compare it with other options.