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Debt Management Plans


DMP (Debt Management Plans)

When you’re struggling to meet the monthly repayments on your credit cards, loans, overdraft and other unsecured personal debts, the amount you owe can quickly spiral.


A Debt Management Plan (DMP) is an agreement with your creditors that allows you to pay back what you owe through more affordable monthly repayments. It is based on what you can contribute after you’ve paid priority debts like council tax, rent and mortgage.


One benefit of a DMP is its flexibility – there is generally no upper or lower limit for the debt, and you can adjust your monthly repayments depending on what you can afford. If your difficulties are a temporary blip, perhaps due to redundancy, it could help you get back on your feet until you start working again.


However, unlike an Individual Voluntary arrangement (IVA), Debt Relief Order (DRO) or even bankruptcy, your debts won’t be written off so you could be stuck with them for years to come. While an IVA is legally-binding, a DMP is not so you or your creditors can cancel it at any time.


Although you can set up a DMP with your creditors, you can also ask a debt advice company or charity to do it on your behalf. This means you don’t have to speak to the creditors directly and you could be eligible for lower repayments, providing the company can agree a deal.