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DMP (Debt Management Plan)

For free and impartial money advice and guidance, visit MoneyHelper, to help you make the most of your money.

Debt Management Plan – Complete Guide, Pros, Cons, FAQs & More

A debt management plan (DMP) is one of the most flexible and manageable debt solutions available to people in the UK. 

If a debt management plan is run correctly, it can help you pay off your debts in an affordable way. 

Today, I’ll look at how debt management plans work and what are some things you should keep in mind if you’re thinking of opting for one. 

financial conduct authority debt plan management plan

What is a Debt Management Plan? 

A debt management plan is an informal agreement between you and your creditors. It states that you will pay back your debts to them over the course of a certain period of time in the form of monthly instalments. 

The amount you pay in each monthly instalment will depend on how much you can afford. 

Unlike most debt solutions in the UK, DMPs are informal. This means that they are not legally binding. This means that while your creditors might agree to a DMP, they can go against its terms if they wish to do so at any point. 

Unlike IVAs, a DMP does not protect you from legal action by your creditors. It also does not protect your assets. 

Some creditors agree to freeze interest and charges on their debts when they enter into a DMP but they are not legally obligated to do so. 

So, why opt for a DMP? DMPs are great if you can’t qualify for formal debt solutions such as an IVA. Furthermore, an IVA also obligates you to release equity from your home in its last year. 

Also, DMPs are extremely flexible. Since they are an informal agreement, any changes that may need to be done to its terms in order to suit your needs can be made relatively quickly. 

Debt Management Plan Pros and Cons

Here are some advantages and disadvantages of DMPs: 


  • They are affordable and manageable since the monthly payments are determined based on what you can afford to pay. 
  • Creditors may freeze interest and charges causing the amount you have to pay back to reduce. 
  • You won’t have to deal with creditors directly anymore. Your DMP provider will do that for you.


  • Creditors are not obligated to freeze your interest and charges. There’s a chance that creditors may not do so for your debts when you enter into a DMP. 
  • DMPs typically last much longer than other formal debt solutions such as IVAs. 

For a more detailed analysis of the setbacks and benefits of a DMP, you can click here

Debt Management Plan Online 

In the wake of the coronavirus, a lot of debt management plans are being set up online. 

There are a number of debt management companies and DMP providers that you can get in touch with who can help you set up your DMP effectively. 

For more information on how to set up your DMP online, you can go here

Best Debt Management Plans

There are a number of great debt management companies currently operating in the UK that you can get help from. 

Some examples of DMP providers include the Debt Advice Foundation and the Debt Counsellors Charitable Trust

For a more detailed analysis of DMP providers operating in the UK, click here

Free Debt Management Plans

I always suggest debtors to opt for DMP providers that charge no fees. 

When you opt for a fee-charging DMP provider, you’re essentially diminishing the amount of money you could be paying towards your DMP. 

Not only can this make your DMP last much longer but there’s often a chance that your creditors might not accept your DMP based on this fact.

Some examples of debt charities that provide free DMPs include Stepchange and Payplan

For more information on free debt management plans, go to this post

Best DMP Forum 

You can find some great information regarding DMPs online especially when you browse through forums. 

This is because forums often have solutions for specific, niche problems which may not be available in typical information regarding DMPs online. 

Some great DMP forums include Debt Management Plan Forum and

For a more detailed analysis of DMP Forums, you can go here

How Long Does a DMP Stay on My Credit File?

Since a DMP is not a formal debt solution, it doesn’t get recorded separately on your credit file. 

Instead, your payments for your unsecured debts that you’ll be making as part of your DMP will show up as reduced payments. They will also have a “DMP” flag alongside them to indicate that the payments have been reduced as part of a DMP. 

These entries stay within credit files for six years. If your DMP lasts longer than six years, then these entries will be removed once your debts have been paid off. 

For more information on how a DMP is recorded on your credit report, click here

What if Creditors Refuse My DMP? 

There could be a number of reasons why a creditor or creditors might refuse your initial payment offer for your DMP. 

If this happens, you can contact the creditor(s) and ask them why they found the payment offer to be unacceptable. Make sure to understand what your creditors need are and whether you can afford to fulfil those needs. 

If the terms suggested by your creditor(s) can be met, you should make those amendments to your payment offer and then it will be accepted. 

For more information on negotiating with creditors, click here

Debt Management Plan or IVA? 

A DMP is an extremely flexible solution but it does not protect your assets and also does not prevent creditors from taking legal action against you. 

An IVA gives you a fair amount of protection but it has strict rules you need to abide by and eligibility criteria which you need to fulfil. 

For a detailed comparison between DMPs and IVAs, click here

DMPs and CCJs 

As mentioned earlier, a DMP does not prevent creditors from obtaining a County Court Judgment (CCJ) against you.

For more information on how CCJs work in relation to DMPs, click here

Debt Management Plan Example Cases

Looking at example cases for DMPs can play a huge role in helping you determine whether a DMP would be right for your financial situation or not. 

Will a Debt Management Plan Affect My Job?

A debt management plan typically does not have any effects on your job. 

Even jobs that require you to be solvent won’t be a problem since DMPs are an informal debt solution. This means that you’re not formally solvent when you opt for a DMP. 

For more information on how your job could be affected by a DMP, click here

Debt Management Plans and Council Tax Bills

Council tax debt is a priority debt that actually cannot be included within a DMP. 

DMPs only cover unsecured debts such as credit cards, personal loans, etc. If you have council tax debt, you’re going to have to keep making monthly payments to it separately from your DMP. 

If you’d like more details on this, click here

Debt Management Plan Payment Holiday

If your circumstances change or become worse and you feel you wo
n’t be able to make your upcoming monthly payment towards your DMP, you could contact your DMP provider and ask for a payment holiday. 

Payment holidays can help you keep your DMP on track by giving you essential breathing space to get your finances in order.

Should I Tell Creditors I am Getting a Debt Management Plan?

There’s no getting around telling creditors that you’re getting a DMP since they are the ones who are going to be approving it. 

Your payment offer for your DMP will be presented to your creditors and they are the ones who will decide whether it should be put in place or not. 

For more details on how this works, click here

Debt Management Plan for Self-Employed Individuals

The budget for a DMP is made by determining the surplus income of an individual. This surplus income is found by what remains of an individual’s income after he/she has tended to all their monthly essential needs. 

Determining the original income for a self-employed individual can be tricky since it varies greatly. 

For tips on how to calculate your income and develop a payment offer as a self-employed individual, click here.

Debt Management Plan Calculator, Budget and Fees

You can find a number of different DMP Calculators online which can help you determine what your monthly payments are going to look like. 

Once you figure out what your monthly payments are going to be, you can even determine how long your DMP is going to last. 

For a detailed analysis and breakdown of how to calculate a budget for a DMP, click here

How do I Apply for a Debt Management Plan

In order to apply for a DMP, you must first determine whether it’s even right for you. 

This can be done by seeking debt advice from a DMP provider or an independent debt charity. Just make sure whoever you obtain debt advice from is authorised and regulated by the Financial Conduct Authority. 

Once you find a DMP provider, you will sit down with them and draft a payment offer. 

This payment offer is then presented to your creditors who will then determine whether it should be put into place or not. 

For a more detailed breakdown of how you can apply for a DMP, click here.

Debt Management Plan vs Debt Settlement Offer

A DMP allows you to pay off the entirety of your debt over a long period of time whereas a debt settlement offer takes care of all of your debt at once. 

A debt settlement offer would involve you paying a large lump sum of money at once to your creditors for them to write off any remaining debt which may remain. 

There’s no one solution which is better than the other. All of it depends on your financial situation and what type of payments (or payment) you can make. 

For a detailed comparison, click here

Debt Management Plan Allowable Expenses

Unlike IVAs and other formal debt solutions, there aren’t many restrictions placed on the amount of credit you obtain. 

That being said, in most cases, it’s not a good idea to obtain credit while you’re in a DMP and you’ll find you’ll have a lot of trouble obtaining credit with a DMP in place anyway. 

All of your surplus income has to be contributed towards your DMP after your essential costs have been taken care of. 

For a complete breakdown of this, click here

Debt Management Plan Universal Credit

Benefits overpayments are non-priority debts which can actually be included in DMPs prior to popular belief. 

For a more detailed analysis on this, you can click here

Debt Management Plan Scotland

Just like in England, Wales and Northern Ireland, you can opt for a DMP in Scotland as well.

DMPs work in pretty much the same way in Scotland as they do everywhere else. You pay what you can afford to pay in the form of a monthly payment until your debts are completely paid off. 

For more information on acquiring a debt management plan in Scotland, you can go to this post

Student loans and Debt Management Plans

Student loans can definitely be included in DMPs as they are non-priority debts. 

However, in order to effectively plan out your payments, you’re going to need the help of a professional. 

Avoid any debt management company that charges a fee to set up your DMP and opt for debt charities that work for free instead. 

For a complete guide on student loans and DMPs, click here

Do-it-Yourself Debt Management Plan

It’s true that you can opt for a debt management plan by yourself without using a debt management company. That being said, you should ask yourself if that’s something that you really want to do. 

Not having to deal with your creditors is one of the main appeals of DMPs that are handled by DMP providers. If you do it yourself, you’re going to have to do all of that by yourself. 

While you can definitely go through a DMP by yourself, it’s not something I’d recommend. 

Debt Management Plan and Renting

If you’re already living in a rented space, a DMP should not affect you in any way. You should be able to keep making payments without having any issues. 

However, if you’re looking for a rented space and have a DMP, you might run into some issues. This is because if your landlord performs a credit check, he/she’ll see that you have a DMP in place. 

This might make him/her apprehensive about giving you the space to rent. 

For a detailed breakdown of how renting a property can be affected by a DMP, click here

Debt Management Plan Criteria

There are really no real strict criteria for being able to apply for a debt management plan. That being said, there are certainly some aspects you must watch out for if you want to have a chance of your creditors approving your DMP. 

You need to have a steady source of income, some amount of unsecured debt and a surplus income high enough to be acceptable to your creditors. 

For more details on DMP eligibility criteria, click here

How Long does a Debt Management Plan Last?

Unlike most formal debt solutions, DMPs don’t have a typical duration. 

Since the entirety of debt is supposed to be paid off, the duration depends on factors such as the amount of debt and the amount you’re paying in a single monthly payment. 

The length of a DMP can exceed even 10 years in some cases.

Debt Management Plan Letter

There isn’t any letter that you’ll have to write as most of this will be done by your DMP provider. 

If a creditor is contacting you too even though they have agreed to a DMP with you, you can write them a letter telling them to stop doing so. 

You can find debt management plan letter templates by clicking here

Debt Relief Order vs Debt Management Plan

A DRO is a formal debt solution aimed at individuals from low-income households. It does not involve paying back your debts and lasts a single year. It has a very strict set of eligibility criteria. 

A DMP is an informal debt solution that can be used by individuals in a number of different financial situations. It has a very flexible set of eligibility criteria. 

No one debt solution is better than the other. To find out which debt solution would be more suitable for you, click here

Will My DMP Affect My Partner?

A DMP is not going to affect your partner unless they are financially associated with you in some way. 

This could be in the form of a joint loan or a joint bank account, etc. 

If you have a joint loan together, then your reduced payments due to your DMP might cause your partner’s credit score to fall. To be sure about whether your partner’s credit score will be affected by your DMP, you should check if you have any financial association with them. 

You can check if you have any financial associations by looking at your or your partner’s credit report. 

Are Debt Management Plans a Good Idea?

Debt management plans can be a great or an extremely bad idea depending on the type of financial situation that you’re in. 

To find out whether a DMP may be right for you or not, you can go to this post.

Do I have to Include All Debts in a Debt Management Plan?

All of your debts cannot be included in DMP as a DMP does not cover priority debts such as mortgage payments, rent arrears, council tax bills, etc. 

All unsecured debts should be included in a DMP as by including all those debts in it, you would be treating your creditors equally. As a result, they might react favourably towards your DMP. 

For a detailed breakdown of this, click here

Government Debt Management Plan

The government of the UK has made its own collective efforts to help individuals that are going through DMPs. 

The Money Advice Service isn’t a DMP provider but it’s a debt advice service launched by the government which provides free and impartial debt help. 

For more details, click here

Joint Debt Management Plan

Joint debt management plans are often opted for by couples that have joint finances. These could be in the form of joint loans, joint bank accounts, etc. 

If you and your partner share a debt or debts, you can opt to get a joint DMP in order to pay that debt off together. 

For more details on how joint DMPs work, you can go here

Bankruptcy or Debt Management Plan?

Again, there’s no one debt solution which is better than the other. All of it depends on the type of situation you’re in. 

Bankruptcy makes you formally solvent and lasts for about three years. Your assets will most likely be seized and sold off if you opt for bankruptcy. 

A DMP’s duration can vary depending on a number of factors and it often discourages your creditor(s) from pursuing legal action against you as long as you’re keeping up with your payments. That being said, your creditor(s) are not legally prevented from taking legal action against you by your DMP. 


A debt management plan can act as a wonderful tool for you to pay off your unsecured debt(s) in an affordable manner. 

Just make sure that you have the right tools available to you when opting for one so that your DMP does indeed turn out to be a success. 

Are you struggling with debt?
Are you struggling with debt?
  • Affordable repayments
  • Reduce pressure from people you owe money to
  • Stop interest and charges from soaring