Debt Management Plan Scotland – 2022 Review

Debt Management Plan Scotland

If you’re struggling with debt and you reside in Scotland, a debt management plan (DMP) is definitely a worthwhile solution that you can look towards. 

Not only does it reduce your monthly payments to something you can afford but it also consolidates all of your unsecured debts into a single payment. 

In this post, I’ll be looking at how debt management plans work in Scotland and whether you should be opting for one if you’re suffering from debt. 

What is a Debt Management Plan and How does it Work? 

A debt management plan is an agreement between you and your creditors which states that you’ll be making reduced monthly payments towards the debts you have. 

The amount of money you pay as part of your monthly payment is determined by how much you can afford

A debt management plan can only be used to cover unsecured debts and it is an informal debt solution. This means that the agreement is not legally binding. 

Unlike most formal debt solutions, a DMP involves you paying the entirety of your debt off. Due to this, debt management plans can often last much longer than other debt solutions. 

For reference, a Trust Deed typically lasts four years and an IVA typically lasts five years whereas a DMP can exceed even 10 years depending on the amount of debt and the monthly payments. 

Your creditors can still pursue legal action against you even if your debt management plan is in place.

Furthermore, when a debt management plan is put in place, your creditors may freeze interest and charges but they are not obligated to do so. 

All of this is compensated by the fact that a debt management plan is an extremely flexible debt solution. It barely has any eligibility criteria and you can utilise it to effectively take care of your unsecured debts. 

Furthermore, you don’t have to deal with creditors once your debt management plan is put into place. Your DMP provider will start dealing with your creditors on your behalf. 

When opting for a DMP, you’ll sit down with your DMP provider and develop a payment offer. A payment offer would have complete details about your income as well as your monthly expenditure. 

Then, taking your income and your expenditure into account, you would detail what your monthly payments towards your potential DMP are going to look like. 

Your creditors are likely to accept your payment offer when they see that you’re paying all you can afford to pay towards your debts. 

Creditors and consumer credit lenders are obligated by the Financial Conduct Authority (FCA) to treat debtors in financial difficulty with fairness. This plays a huge role in why creditors will be likely to accept your payment offer if they feel you’re doing all you can to address your debts. 

Determining your payment offer in a way that is affordable to you but also acceptable to your creditors can definitely be confusing. Your debt management company (or DMP provider) can definitely help you out in this regard. 

the debt arrangement scheme homeowner dmps

What are some Benefits of a DMP? 

Some great benefits of entering into a DMP are: 

  • You won’t have to deal directly with your creditors 
  • All of your unsecured debts will be consolidated into a single payment 
  • Interest and charges will most likely get frozen 
  • You are not formally insolvent when you enter into a DMP so your name does not show up in any public insolvency register 
  • The plan is very flexible and changes can be made to your monthly payments if your financial circumstances change. 

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What are Some Alternatives to a DMP? 

A DMP is an informal debt solution which isn’t legally binding for your creditors. 

If you’re looking for something different that is legally binding in Scotland, you can turn towards either a Trust Deed or a Debt Arrangement Scheme (DAS)

Trust Deed

A trust deed in Scotland works similar to how IVAs work in England, Wales and Northern Ireland. 

It involves you paying money in the form of reduced payments towards your debts over a fixed period of time (typically four years) and after this time, any remaining debt you have is written off. 

A trust deed also involves your assets being passed to someone who will be responsible for managing your finances. This person would be known as your trustee. 

The goal of the trustee is to pay back the debt to your creditors as much as possible. This may or may not involve some of your assets being sold off in order to raise money to pay towards your creditors. 

Debt Arrangement Scheme (DAS)

A DAS is a debt management tool available to you if you reside in Scotland.

You can utilise a DAS to apply for a debt payment programme (DPP). A DPP can help you repay your debts at an affordable rate in the form of monthly payments. 

You can think of a DAS as a formal version of a DMP

It’s important to note that debt payment programmes can only be set up by approved and licensed organisations. An example of such an organisation would be Stepchange Debt Charity in Scotland. 

A DPP involves you paying your debts in the form of reduced monthly payments while still leaving you with a budget to take care of your essential monthly expenditures.

All interest and charges on your DPP are frozen when you apply for a DPP. 

Furthermore, your creditors are legally prevented from taking any legal action against you. 

Just like in a DMP, if your financial circumstances change, you can choose to change the terms of your DPP such as changing how much you pay each month or applying for a payment break so you can get back up on your feet. 


If you live in Scotland and are having trouble paying off your debts, then a DMP is definitely something you can think about. 

It will make your debts much more manageable and you won’t have to deal with creditors directly anymore.


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debt free date?
  • Affordable repayments with an end date in sight
  • Reduce pressure from people you owe money to
  • Stop interest and charges from soaring