Debt Management Plan? (DMP)

What Is A Debt Management Plan?

A Debt Management Plan, or ‘DMP’, is an informal debt solution managed by a DMP solution provider. This solution enables you to repay your included debts in one joint payment each month at an agreed affordable payment level.


As a Debt Management Plan is an informal arrangement, there is no set minimum criteria, however each DMP solution provider can set their own minimum acceptance criteria. These qualifying levels are usually based upon the type of debt, debt level and number of creditors you have. Debt Management Plans are available in all countries of the UK, although residents of Scotland have access to Scotland-specific solutions which are usually more beneficial.


Advantages and Benefits

  • A Debt Management Plan, or DMP, is an informal agreement to pay one affordable regular payment which – if you have a fee-free DMP – is shared amongst your creditors, or if you have a fee-bearing DMP, is shared amongst your creditors AFTER your management fee has been taken.
  • Interest and charges on included debts may be frozen through your DMP company negotiating with your creditors.
  • Having a DMP in place can slow down creditor contact.
  • Debt Management Plans are flexible, informal solutions and are not legally binding, so you can leave the plan at any time, for example if your financial situation improves.
  • Your Debt Management Plan provider will deal with your creditors on your behalf.

Disadvantages and Potential Consequences

  • There are fee-free DMPs available, however if you choose a fee-charging DMP company, you will usually be charged for their services monthly within your usual DMP payment. Fees vary between DMP companies.
  • Interest and charges are not guaranteed to be frozen.
  • Creditors can still contact you about payments and may refuse to co-operate.
  • A DMP may adversely affect your credit rating and your ability to obtain credit may be limited.
  • Your debts will still have to be paid in full. Reducing monthly payments to a level you can afford will generally increase the term of your debts.