Debt solutions · 6 min read
What is a debt management plan (DMP) and how does it work?
A debt management plan (DMP) is an informal arrangement to repay your non-priority debts at a rate you can afford. It is flexible, has no fixed end date and is one of the most popular ways to get on top of credit card and loan repayments.
How a DMP works
A DMP provider works out a realistic monthly budget with you, then asks your creditors to accept reduced payments. You make one monthly payment to the provider, who shares it between your creditors.
Because a DMP is informal, creditors do not have to agree, although many do when the offer is fair and based on an accurate budget. Many providers also ask creditors to freeze or reduce interest and charges, but this is not guaranteed.
Which debts can go into a DMP?
DMPs are designed for unsecured, non-priority debts, such as:
- Credit cards and store cards
- Personal loans
- Overdrafts
- Catalogue and buy now, pay later debts
- Payday loans
Which debts can't go into a DMP?
Priority debts — like mortgage or rent arrears, council tax, energy bills, court fines and TV licence arrears — should be dealt with first and are not normally included. This is because the consequences of not paying them can be serious, such as losing your home or enforcement action.
How long does a DMP last?
A DMP lasts until your debts are repaid in full, which can take several years if payments are low. You can end it at any time, and you can increase payments if your situation improves.
Will a DMP affect my credit rating?
Yes. Creditors will usually record reduced payments or a default on your credit file, which makes borrowing harder while the plan is running. Defaults drop off your file six years after they are recorded, even if the debt is still being repaid.
Is a DMP right for me?
A DMP can suit people who can afford to repay their debts in full, just more slowly. If repaying everything would take many years, a formal solution such as an IVA may write off more. Our friendly UK team can help you understand your options.
Find out more about debt management plans →
This article is general information only and may not reflect your circumstances. Rules and limits can change, so always check the details with an authorised provider before making a decision.
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Why do we ask this?
Your total debt amount helps us match you with solutions designed for your level of borrowing.
