Debt Management Plan Calculator - Monthly Repayments

For free & impartial money advice you can visit MoneyHelper. We work with The Debt Advice Service who provide information about your options. This isn’t a full fact-find, some debt solutions may not be suitable in all circumstances, ongoing fees might apply & your credit rating may be affected.

If you’re thinking about a Debt Management Plan (DMP), this is the perfect place to start. Every month, over 170,000 people come to our website for advice on debt solutions.

In this article, we’ll help you understand:

How to use a DMP calculator to work out your monthly payments.
The things you need to know before using a DMP calculator.
If you could write off some of your debt.
How to find out how long your DMP might last.
The different calculators you can find online.

We know that debt can be concerning, and it’s quite common to feel unsure about seeking help. In fact, Citizens Advice revealed that 60% of adults facing financial difficulties hesitate to seek assistance.¹

Don’t worry, you’re not alone. Our easy-to-use calculator can show you your monthly repayments, how long your DMP might last, and how much money you could save.

Let’s get started!

Computing Payments

Firstly, you have to determine what your monthly income is. Of course, this is much easier if you have a regular, steady income.

On the other hand, if you have an income that varies every month, you might have a little trouble determining how much you earn.

A good way to get an approximate value of how much you earn each month, you should take the average of your monthly income for the past 6 – 12 months.

You can use that as the monthly income that you earn.

Once you’ve figured out your monthly income, it’s time to figure out what your monthly expenditures look like.

Looking up bank statements for the previous months can help a lot in figuring out how much you spend on essentials every month.

It’s important to note that your payments towards any priority debt(s) that you have need to be included within this category as well. This is because these types of debt can’t be part of DMPs.

Now that you have your monthly income and your monthly expenditure, you can subtract the latter from the former to get your monthly surplus (or disposable) income.

This disposable income is the approximate amount of what you can hope to pay towards your debt repayments each month.

How a debt solution could help

Some debt solutions can:

Stop nasty calls from creditors
Freeze interest and charges
Reduce your monthly payments

A few debt solutions can even result in writing off some of your debt.

Here’s an example:

Situation

Monthly income	£2,504
Monthly expenses	£2,345
Total debt	£32,049

Monthly debt repayments

Before	£587
After	£158

£429 reduction in monthly payments

If you want to learn what debt solutions are available to you, click the button below to get started.

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Before any Calculation, You Should Know That…

Debt management plans are informal debt solutions. This means that they are not legally binding.

Furthermore, a debt management plan does not cover priority or secured debts such as mortgage payments, rent arrears, council tax bills, criminal fines, etc.

If you only have these types of debts, you shouldn’t be considering a debt management plan.

If you have a combination of secured and unsecured debts, then you should know that the secured debts you have cannot be included within your debt management plan.

As a result, you’re going to have to make payments to those priority debts separately from your debt management plan.

Thus, when you’re making a payment offer for your debt management plan and determining how much you can afford to pay towards it each month, you need to take the payments towards your priority debts into account.

Of course, the payments you’re going to make towards your priority debts are going to reduce the amount of money you can contribute towards your debt management plan.

You also cannot give your debt management plan higher preference as priority debts have to be dealt with first. This is because they have much more dire consequences if ignored.

When you’re making a payment offer for your DMP, your payments towards priority debt(s) will be a part of your ‘essential living costs’.

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DMP Comparison

As mentioned earlier, secured debt cannot be included in your debt management plan.

To help you better understand the main differences between a DMP and other debt solutions, I’ve created this quick table.

DMP vs Alternative Solutions	How It Can Help Tackle Debt	Suitable For Individuals…
Debt Management Plan (DMP)	An informal agreement to pay back non-priority debts in a more manageable way, but does not write off any debt.	…seeking a flexible arrangement without legal proceedings.
Debt Relief Order (DRO)	A formal solution that freezes debts for a year, after which they may be written off.	…with a total debt under £20,000, low income, and minimal assets, who cannot afford to pay off their debts.
Individual Voluntary Arrangement (IVA)	A formal, legally binding agreement that typically lasts for 5 years and can write off a portion of your debt at the end. Credit rating will be negatively affected. Homeowners can keep their home.	…with a larger amount of debt who can commit to a fixed repayment plan and want to avoid bankruptcy.
Bankruptcy	A formal legal process that writes off most debts but has significant consequences, including potentially losing your home and negatively impacting your credit rating and job prospects.	… with significant debts that cannot realistically pay them off. More severe option with substantial consequences.
Consolidation Loan	A consolidation loan involves taking out new credit to pay off existing debts. It can simplify payments and potentially reduce interest rates. But, you could also end up paying more interest overall.	.. with multiple debts looking to consolidate into a single payment, usually with a good credit score to obtain favourable terms.
Payment Holiday	Payment holidays offer short-term relief by pausing or reducing payments. Payment holidays don’t reduce the total debt amount and are usually for a short duration.	..with short-term financial difficulties needing temporary relief from debt payments.
Equity Release	Equity release involves homeowners releasing equity from their property. It provides a lump sum or additional income by using the home’s value but reduces the property’s equity.	…with debts and want to unlock the value in their home to pay them off, reducing their property’s equity. (Ideally for older homeowners, usually 55+)
Informal Negotiation	Informal negotiation is not legally binding and involves negotiating with creditors for better terms.	…with debts and wish to negotiate terms independently and prefer to have a flexible, non-binding arrangement with creditors.

Determining the Duration

A debt management plan can be a great way of consolidating debts but it’s definitely a debt solution that can go on for a much longer time than other debt solutions.

Many debtors are apprehensive about opting for a debt management plan as they are afraid that it’s going to last an extremely long time.

For comparison: an IVA typically lasts five years whereas the duration of a DMP can exceed ten years.

Once you’ve figured out what your monthly debt payments are going to be, you can use that value to determine approximately how long your DMP is going to last.

Simply divide your total debt by the amount you’ll be paying every month towards your DMP.

This should give you an approximation of the amount of months it’s going to take for your DMP to finish.

You may be able to get your DMP provider to make changes to your payments over the years according to your changing financial situation. Due to this, the value determined here is simply an approximation; Not an exact value.

For more debt advice on this, you should contact your debt management plan provider.

You can also get free debt advice from independent debt charities such as Stepchange or Payplan.

You can visit other agencies as well, just make sure they’re authorised and regulated by the Financial Conduct Authority (FCA).

Thousands have already tackled their debt

Every day our partners, The Debt Advice Service, help people find out whether they can lower their repayments and finally tackle or write off some of their debt.

I’d recommend this firm to anyone struggling with debt – my mind has been put to rest, all is getting sorted.

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Getting Estimates Online

There are a number of DMP calculators available online that could help you determine a number of different factors, including what your debt payments will be as well as how long your DMP is going to last.

A calculator can also help you understand how much money you’ll be saving if your creditors agree to freeze interest and charges on your debt(s).

This is something that creditors may or may not do as part of the DMP.

Another thing that sometimes happens in DMPs that doesn’t get discussed a lot is that maybe one or two creditors may not agree to your DMP whereas others would.

In this case, you would have to deal with those creditors separately from your DMP.

As you can probably tell, the math with this can get overwhelming. There are calculators available online for this as well.

Again, I have to point out that any calculator you use will only give you rough estimates because there are several other aspects that could affect the duration of your DMP.