Debt Management

A Debt Management Plan (DMP) is an informal debt restructuring solution for unsecured debt. If you owe money to more than one creditor then a DMP could be right for you.

DMPs are provided by debt management companies or charitable organisations who could negotiate with your creditors to try to get them to accept lower repayments and freeze any further interest that might otherwise be added to your current debt. There is an option to pay a fee for this service with a debt management company or you can seek advice and/or assistance from the free sector, such as a charitable organisation.


Disadvantages of a DMP

  • Your creditors are not obliged to accept a DMP. The arrangements are informal meaning your creditors can change their mind at any time.
  • Your credit rating may still be affected.
  • While such arrangements reduce your monthly repayments to make them affordable it usually means it will take a much longer period to repay your debts.
  • Creditors are not obliged to freeze interest or charges.
  • Unless your debts are less serious you could end up in debt for a very long time. In the worst case you may find you have no real prospect of getting out of debt and becoming debt free.
  • Depending on the status of your credit file, your credit rating may be affected. Entries to your credit file remain for 6 years from the date they are entered.

Advantages of a DMP

  • One affordable monthly contribution to your creditors.
  • Debt management is an informal arrangement that avoids the need for formal insolvency procedures such as an IVA or bankruptcy.
  • By reaching agreement with your creditors a DMP may suspend actions against you such as County Court Judgments (CCJs).
  • In many cases, creditors may freeze interest or charges
  • Your monthly debt repayments may be reduced.


Is a DMP right for me?

A DMP can be a good debt solution, especially if your problems are likely to be short term. It may be suitable if you have available income each month once your priority costs have been met e.g. food, accommodation and utility bills.

If this is not the case you may need to consider a formal insolvency solution, such as an IVA, to deal with your debts.

For more information about debt management read our Frequently Asked Questions pages.


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Debt Management

Updated on 2016-12-05T15:42:12+00:00, by Kristian Stock.