A debt management plan (DMP) is informal, so the amount you pay each month can be set around what you can genuinely afford, which matters more when your income varies as a self-employed person than it does for someone on a fixed salary. Managing a DMP alongside variable trading income takes a bit more care, but it does not usually stop you continuing to trade or, eventually, remortgaging.
This page looks at how a DMP works around self-employed income, when payments might need adjusting, and what a lender will want to see once you are ready to remortgage. For the general position, see remortgaging with a debt management plan, and for how self-employed income is assessed, see self-employed with bad credit.
On this page
This page covers
- Credit issue
- Debt management plans (DMPs)Usually stays on your credit file for depends on the individual accounts and markers.
- Employment
- Self-employedLenders commonly ask for tax calculations and accounts covering one or more years.
Read the main guide: Remortgaging when you are self-employed and have bad credit
In short
- A DMP is informal, so payments can be set and reviewed around what you can afford, including varying income.
- Creditors do not have to agree to reduced payments or freeze interest, whatever your income source.
- A DMP itself is not a public record, but missed payments or defaults on individual accounts can still show on your credit file.
- Remortgaging is possible during or after a DMP, though most lenders prefer to see it completed or well established first.
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.
How does a DMP fit around variable trading income?
A DMP payment is usually based on a budget of your income and essential outgoings. For a self-employed person, that budget often needs a realistic average across quieter and busier months, rather than a single figure that only works in a good month. Most DMP providers will review your budget periodically, and it is worth flagging significant, lasting changes in trading income rather than waiting for a scheduled review.
Creditors do not have to agree to reduced payments or freeze interest under a DMP, so a longer-term drop in income can mean the plan itself needs renegotiating, not just a temporary payment adjustment.
What if a quiet trading month means you cannot make a payment?
| Situation | What it may mean | What usually helps |
|---|---|---|
| One quiet month | A short-term shortfall against the agreed payment | Contact your DMP provider before missing the payment, not after |
| A pattern of quiet months | The agreed budget may no longer reflect your income | Ask for a budget review rather than repeatedly falling short |
| A sustained income rise | You may be able to increase payments and finish sooner | Ask your provider whether overpayments are accepted |
Free debt management plans are available from some debt charities. General information only, not advice on your specific plan.
What shows on your credit file, and for how long?
A DMP itself is not a public record, but the accounts included in it can show missed payments or defaults, which generally stay on your credit file for 6 years from when they were recorded. Keeping business and personal accounts separate can make it easier for both your DMP provider and, later, a lender, to see which figures relate to your trading and which to personal debts.
Remortgaging during or after a self-employed DMP
Remortgaging while still on a DMP is possible in some cases, but most lenders prefer to see it completed, or at least well established with a clear, consistent payment record. For a self-employed applicant, this usually means having accounts or SA302s that show your trading income has stabilised enough to support both the DMP payments and a mortgage. See an active debt management plan and a completed debt management plan for how each stage is generally viewed.
Using a remortgage to clear the DMP
Some people consider remortgaging to raise money and clear the debts in a DMP in one go. This turns previously unsecured debt into debt secured on your home, and a longer mortgage term can mean paying more overall. A regulated adviser must consider whether this is appropriate for you before recommending it. See remortgaging to clear a DMP, and consider free advice from StepChange or National Debtline first.
What may affect a self-employed DMP remortgage
| Factor | Why it matters |
|---|---|
| Whether the DMP is active or completed | Most lenders prefer a completed DMP, or one with a long, consistent payment record. |
| Consistency of payments | A settled record of payments made in full and on time matters more than the DMP’s existence alone. |
| What shows on the underlying accounts | Any missed payments or defaults on accounts within the DMP are assessed in their own right. |
| Trading income stability | Accounts or bank statements showing your income can support both the DMP and a mortgage matter to a lender. |
| Time since the DMP started or completed | A longer track record generally widens the range of lenders that may consider an application. |
| Other credit issues | Any CCJs or defaults connected to the same debts are usually looked at alongside the DMP. |
| Loan-to-value and equity | More equity can widen the choice of lenders when income and a DMP are both under review. |
These are general points, not lender rules. Each lender sets and changes its own criteria.
Information an adviser may ask for
You don’t need all of this to make an enquiry. It helps to know where to find it, because an adviser is likely to ask about most of it.
- Details of your DMP, including start date and whether it is active or completed
- A recent statement from your DMP provider showing your payment record
- SA302s or accounts showing your trading income
- Business and personal bank statements
- Details of any missed payments or defaults on accounts within the DMP
- An explanation of what led to the DMP and how your circumstances have changed
Frequently asked questions
Can I change my DMP payments if my trading income drops?
You can ask your DMP provider for a budget review if a change in income is likely to last, rather than a single quiet month. Creditors do not have to agree to reduced payments, but a realistic, sustainable budget is usually in everyone’s interest.
Does a DMP itself show on my credit file?
The DMP arrangement itself is not a public record, but missed payments or defaults on the individual accounts within it can show on your credit file, generally for 6 years from when they were recorded.
Can I remortgage while I am still on a DMP?
It is possible in some cases, though most lenders prefer to see the DMP completed or well established with a consistent record. Being self-employed adds the extra step of showing your trading income can support both the DMP and a new mortgage.
Should I use a remortgage to clear my DMP in one go?
This is a decision to make with a regulated adviser, since it secures previously unsecured debt against your home and a longer term can mean paying more overall. Free advice from StepChange or National Debtline can help you weigh it up first.