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Your home may be repossessed if you do not keep up repayments on your mortgage. Think carefully before securing other debts against your home. Borrowing over a longer term can mean paying back more in total.
A debt management plan (DMP) is an informal arrangement between you and your unsecured creditors, usually set up through a debt charity or a commercial provider, where you make one affordable monthly payment that’s shared out between everyone you owe. It isn’t a formal insolvency procedure like an IVA or bankruptcy, and it has no legal backing, which means creditors can still choose whether to accept it.
DMPs are generally used for unsecured debts such as credit cards, personal loans, overdrafts, catalogue accounts and some types of buy now pay later borrowing. Secured debts, including your mortgage, aren’t usually included in a DMP, though mortgage arrears can sit alongside one.
How does a debt management plan work?
You, or a debt adviser working with you, work out a budget showing your income and reasonable living costs. Whatever is left over becomes your monthly DMP payment. The provider then contacts each of your creditors, explains your situation, and asks them to accept the reduced payment, and often to freeze or reduce interest and charges.
Each creditor decides separately whether to agree. Most cooperate, especially once they can see a consistent payment history, but none of them has to. This is the main practical difference from a formal debt solution such as an IVA, where creditors are legally bound once the arrangement is approved.
| Debt management plan | IVA | |
|---|---|---|
| Legal status | Informal, no legal protection | Formal insolvency procedure |
| Creditors bound to accept | No | Yes, once approved |
| Typical debts included | Unsecured only | Unsecured only |
| Interest and charges | May be frozen or reduced, creditor’s choice | Usually frozen once approved |
| Can be stopped by you | Yes, at any time | Only by failing or formally ending it |
| Credit file record | Not the plan itself, but individual account markers | Recorded for 6 years from the start date |
Our guide on DMP or IVA: what’s the difference goes into this comparison in more depth.
Who arranges a debt management plan?
DMPs are arranged either through a free debt charity, such as StepChange or National Debtline, or through a commercial provider that charges fees. Free providers don’t take a cut of your payment, so more of it reaches your creditors each month. Commercial providers can charge a setup fee and an ongoing monthly management fee, which is deducted before your creditors are paid.
It’s sensible to check what a free provider can offer before agreeing to a fee-charging plan, since the underlying arrangement (a reduced monthly payment shared between creditors) works the same way either way.
How long does a DMP last?
There’s no fixed term. A DMP runs for as long as it takes to clear the included debts at the agreed payment rate, which can be several years, and can run longer if your payment is reduced or a debt is added later. Our guide on how long a debt management plan lasts covers what affects the length.
You can increase your payment, pay off individual debts early, or stop the plan altogether if your circumstances change, since it isn’t a binding contract in the way an IVA is.
Does a DMP affect your credit file?
The DMP itself isn’t a public record and doesn’t appear on your credit file as “DMP”. However, the individual accounts included in it can still show markers, such as missed payments, defaults or an arrangement to pay marker, depending on how each creditor chooses to report your reduced payments. These markers follow the normal credit file rules and generally stay for 6 years from when they were recorded.
Our guide on whether a DMP affects your credit score explains this in more detail, including what tends to happen once the plan finishes.
What does it mean if you want to remortgage?
A DMP doesn’t automatically stop you remortgaging, but it does raise questions an adviser or lender will want answered. Because the DMP itself isn’t on your credit file, what matters most is what the underlying accounts show: whether there are defaults or missed payment markers, how old they are, and whether the debts included in the plan are still being repaid on the reduced basis or have been settled.
Affordability is also relevant. Lenders assess your income and outgoings, and an ongoing DMP payment is a committed monthly outgoing that reduces what you have left for a mortgage. If you’re currently on a plan, our page on remortgaging with an active debt management plan explains what an adviser typically needs to see.
Some people consider a remortgage specifically to raise money to clear a DMP in one go. This can be worth discussing with an adviser, but it means turning unsecured debt into debt secured against your home, and a longer mortgage term can mean paying more overall even if the monthly figure looks lower. Our page on debt consolidation remortgages sets out that risk in full, and it’s not something to decide without weighing up the alternatives.
Where to get help
If you’re thinking about starting, changing or leaving a DMP, free and impartial advice is available from MoneyHelper, StepChange and National Debtline. They can help you compare a DMP with other options, including an IVA, a debt relief order, or simply negotiating directly with creditors, before you commit to anything or pay a fee to a commercial provider.
Frequently asked questions
Is a debt management plan free?
Some are, and some charge fees. Free DMPs are available from debt charities and not-for-profit providers, while some commercial providers charge a setup and monthly management fee taken from your payment before it reaches your creditors. It's worth comparing free options first. See our guide on free debt advice.
Do all my creditors have to agree to a DMP?
No. A DMP is informal, so each creditor decides individually whether to accept the reduced payment and whether to freeze or reduce interest and charges. Most creditors cooperate, but they aren't obliged to, which is different from a formal arrangement like an IVA.
Can I still use my bank account and credit cards on a DMP?
You would usually be expected to stop using credit, including cards and overdrafts, on the accounts included in the plan, since the point is to repay what you already owe rather than add to it. Your DMP provider can talk you through what's expected.
Will a DMP stop creditors contacting me?
It often reduces contact once creditors know a plan is in place, but it doesn't legally stop them chasing the debt, applying interest or charges, or taking further action such as a CCJ, because a DMP has no legal protection. Our guide on what happens if you stop paying a DMP explains what can follow if payments lapse.