Debt Management Plans (DMPs)

A Debt Management Plan (DMP) is an affordable repayment plan where you calculate how much money you have available each month to pay your creditors.

Debt managementDMPs can be suitable if:

  • You can’t afford to keep up your contractual payments.
  • You have debts of at least £5000.
  • You have several creditors.
  • Your have unsecured debts that could be enforceable.
  • You have at least £100 a month to repay your creditors.
If your monthly payments are not high enough to clear the debt in a few years, the DMP could last a very long time.

To determine how much you can afford to repay towards your debts, you need to put together a budget. See budgeting.

DMPs can be self-managed or arranged through a third party DMP provider. Both have advantages and disadvantages.



Third party
  • The third party negotiates with your creditors on your behalf.
  • Takes the stress out of dealing with creditors.
  • You make a single monthly payment and the provider distributes the money to pay each creditor.
  • You can get advice and support from the DMP provider.
  • All correspondence is sent to the DMP provider, this can be useful if you don’t want others at home to find out about your debts.
  • Loss of control over your financial affairs.
  • Potential lack of information and loss of paperwork.
  • You may not know which creditors have not frozen interest.
  • Can be difficult to exclude some debts.
  • You need to provide the DMP provider with a lot of personal and financial information.
  • Some providers charge a fee while others are funded by creditors.
  • You’ll normally be expected to have at least £100 a month available for repayments.
  • You retain full control.
  • You can chose to stop paying some creditors or to selectively offer a final settlement to some.
  • You can offer any amount from £1 a month tokens.
  • You know exactly what payments are being made and to who.
  • You keep hold of all correspondence and paperwork.
  • You choose what information to supply your creditors. No need to send a budget sheet if you don’t want to.
  • You need to deal with creditors yourself.
  • You may be pressured into paying more than you can afford.
  • Some creditors may not take you seriously and may be more willing to communicate with intermediaries.
  • You will keep getting letters and possibly calls.
  • You may find it hard to get some creditors to agree to freeze interest.
There are many DMP providers out there, most of them charge a fee for their services and fees can be quite high, meaning less of your money going towards clearing your debts.
If you want to go through a third party, there is no need to pay for a DMP, there are free DMP providers.

Best known free DMP managers

Although many creditors will freeze interest and charges, they are under no obligation to do so and some continue adding interest, making it harder to clear the debt by making reduced payments.
DMPs are not legally binding, even when managed by well-known organisations. The majority of creditors will honour the agreement and not take you to court, but there are no guarantees.
Your credit rating will be affected. When you go straight from contractual payments to a DMP, some creditors may not default you immediately, it may be months or even years after you entered into your DMP.
Some companies will try to convince you to enter into an IVA instead. An IVA is a form of insolvency and should only be considered as a last resort. Furthermore, the insolvency practitioners fees make up a substantial part of your IVA payments which explains why there are so many promoting this solution.
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Free DMP providers