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It’s important to remember that no debt solution is perfect and there is no ‘one-size-fits-all,’ which is why we recommend speaking to one of our expert debt advisors about your options and next steps.
Debt Management Plan (DMP)
Entering into a DMP can help debtors commit to paying off the entirety of their debt through a single, affordable monthly repayment amount.
What is a DMP?
A DMP is an informal agreement between you and your creditors that allows you to repay your debts in reduced payments that are more affordable for you. Your financial situation will be assessed to establish what your single, affordable monthly payment will be.
Is a DMP right for me?
A DMP is suitable for anyone struggling to make their contractual payments each month (the repayment amount originally agreed with their creditors) but who still have some money left over after they have paid for their essential living expenses such as household costs, travel and clothing. A DMP is only available for residents of England, Wales and Northern Ireland. For residents of Scotland, a debt arrangement scheme is a similar solution.
Is a DMP legally binding?
With a DMP, there is no legally binding contract to stop creditors from chasing payment or even agreeing to the DMP in the first place.
How much of my debt will a DMP write off?
Unlike other solutions, a DMP does not write off any of your debt. All of your debt must be paid back in full over time.
It’s affordable. Your monthly DMP repayments will depend on your personal income and expenditure, meaning it will be an amount you can afford each month.
Your DMP will be reviewed regularly to make sure you're only paying what you can afford.
You will be completely free of debt in an agreed period of time.
If creditors agree to the debt management plan, any communications you have with them should significantly decline, though they may not disappear completely.
In most cases, interest rates and charges will be frozen as part of a debt management plan.
You won’t be asked sell your assets.
Your name will not be added onto the Insolvency Register.
Only non-priority debts can be included in a debt management plan. These include such expenses as credit cards, catalogues, and personal loans. For debts including mortgage/rent, utility bills, and council tax arrears you may wish to consider an alternative financial solution.
Your credit rating and your ability to obtain credit will be affected for the duration of your plan or possibly longer.
A debt management plan is not a legally binding agreement. This means creditors are not required to accept it and you'll have no legal protection from creditors.
Most creditors will agree to reduce or stop interest and charges but if they don't, the amount you currently owe could increase.
Unlike with other solutions, no amount of your debt will be written off and you will have to pay back your debts in full.
Your creditors may still take further action against you, such as a County Court Judgement (CCJ).