Debt Management Plan

What is a Debt Management Plan?

A Debt Management Plan (DMP) is an informal agreement between you and your creditors for paying back your unsecured debts.  Unsecured debts are things like credit cards, loans and store cards.

You pay back the debts by one set monthly payment, which is divided between your creditors.

Most DMPs are managed by a Debt Management Plan (DMP) provider who deals with your creditors for you.  This means you don’t need to deal with your creditors yourself.

A DMP is not legally binding, meaning you’re not tied in for a minimum period and can cancel it at any time.  However, this also meant that it is not binding on your creditors either.

Creditors do not have to freeze interest under a DMP.  The debt management company will have to persuade each creditor that it makes sense for them to freeze interest and charges to avoid the debt increasing.


  • You’ll pay less each month – you’ll start to pay one monthly amount that’s a lower payment than what you’re paying now. It’ll be a payment based on what you can realistically afford and stick too. It will also be worked out so that you have enough each month to pay for all the other essentials you have. So you’ll always have enough for your utility bills, your food, rent or mortgage, travel costs and so on.
  • You should receive less contact from your lenders – once your Debt Management Plan is up and running they’ll really have no reason to be contacting you (apart from to send you statements from time to time). In any case, if they do, you can always ask your debt advisor to deal with it for you, if you’re not confident doing it yourself.
  • Your lenders may agree to stop adding further interest and charges. As DMPs are not a formal solution, your lenders don’t have to agree to stop charges and interest, but in our experience, they often do. And, although you are not formally protected from legal action, as you would be on other formal debt solutions, like an IVA or bankruptcy, it is likely that your lenders won’t try to take you to court because you are making an effort to pay.
  • DMPs are also confidential. Unlike formal (insolvency) debt solutions your name isn’t entered into any public register if you decide to start a DMP.  So the only people that need to know are your Debt Management Plan provider, you, and your lenders.


  • It may take longer to pay back your debt and you will pay more overall because you’ll be paying less each month.
  • your creditors won’t necessarily freeze the interest and charges on your debts, so the amount you owe might go down by less than you think.
  • your Debt Management Plan provider might charge you a fee.
  • your creditors might refuse to co-operate or continue to contact you.
  • the DMP may show on your credit record, making it harder for you to get credit in the future.

DMP help and Advice

Contact Creditfix to speak with one of our advisers and see what’s best for you and your situation.

Call us now for immediate and confidential free debt advice on 0808 208 5198 or complete the form. We can start to work through our debt problems as soon as you contact us.

Struggling with debt? Call today and find out how we can help.

Debt Management Plan Frequently Asked Questions

You choose a DMP provider and ask them to prepare a plan for you. There are various ways to find a DMP provider, including:

• from your local Citizens Advice Bureau
• asking National Debtline for a referral
• doing an internet search for debt management companies or debt management plans
• if you're already having debt advice or counselling, asking for a recommendation from your adviser
• if you have friends or family with a DMP, asking them for a recommendation.

A DMP provider will normally help you work out your budget, but it's a good idea to do this yourself first. This will mean you've got a good idea of how much money you’d have left over each month to pay into the DMP.

Many DMP providers will charge fees, but there are some providers who will help you set up a DMP for free.

If you do choose to use a provider who charges a fee, make sure you find out how it will affect the length of your DMP, the amount of money that will go to your creditors and the amount that will go to the DMP provider.

A DMP provider works on your behalf to work out what you can afford to pay, negotiate payments with creditors, and distribute the payments to your creditors each month. Clearly, any organisation or company providing a professional service like this will have costs it needs to cover.

Commercial DMP providers cover these costs by charging fees to their customers. Meanwhile, the free providers, who are normally charities, are paid directly by the banks and credit card companies themselves, meaning they don't need to pass fees on to their customers.

Your DMP may show up on your credit reference file. Some creditors may ask for a note to be put on your file to say that you have a DMP. This would reduce your chances of getting credit if you applied for it while on your DMP, as it would show you've had trouble keeping up with repayments. However, if you kept up with your DMP repayments, the DMP would look better on your credit reference file than unpaid debts or debts that you were only making infrequent payments towards.

The note may also stay on your file for a time after the DMP has ended, so you may struggle to get credit for some time afterwards.

If you miss payments on a debt, this is also recorded on your credit reference file. Even if you're in a DMP, your creditors may still record that you've missed payments, as you'll be paying less than you agreed to when you took out the original credit agreement. This will mean you could find it harder to get credit while you're making reduced payments and for some time afterwards.