What is a Debt Management Plan?

A debt management plan (or DMP) is an informal agreement in which you agree to repay your creditors off at an agreed, but affordable, amount each month until your debts are paid off. Once instructed, we talk to your creditors and arrange an affordable repayment on your behalf. You simply make one monthly payment to us and we distribute the money as agreed. Making sure that everyone gets paid what they need.

A debt management plan could be the correct debt solution for you can still afford to repay something after paying for essentials; such as food, transport and utilities. Since you are paying less than you should, your creditors might still chase you for payment, but we have a good success rate in stopping calls and letters from creditors.

Pros of a Debt Management Plan

  • Just one monthly payment.
  • Only repay what you can realistically afford.
  • Creditors usually stop chasing for payment.

Cons of Debt Management Plan

  • You credit rating will almost certainly be affected.
  • Can take a long time.
  • Creditors can continue to chase payment.
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Debt Management Plan FAQs

In a debt management plan, you can include unsecured debts, so most everyday debts are likely to be included; credit card, payday loans, overdraft, catalogues and personal loans can all be included. However, secured loans and certain other debts, will need to be paid separately.

Unfortunately as this is an informal debt solution they can still chase you for payment. However, Debt Assist will try our best to ensure that this doesn’t happen, and we have a high success rate in stopping creditors chasing payment.

In short, yes. However, if you are in a position for a debt managment plan to be a viable option, you are already struggling to meet repayments on multiple debts, and therefore your credit rating is already likely to be affected. however, a DMP is the first step on rebuilding your credit score.

Alternatives to a Debt Management Plan

Individual Voluntary Arrangement (IVA)

An individual voluntary arrangement (IVA) is a legal procedure for people in financial difficulties with unsecured debts. It is a legal agreement between you and your creditors to only pay what you can actually afford to pay off your debts.

Bankruptcy

If your debt has reached an unmanageable level, bankruptcy is one way of managing it, especially if you are in no position to pay off your debts in a reasonable time frame.

Protected Trust Deed (PTD)

Only for resident of Scotland, a protected trust deed (PTD) is similar to an IVA in that it is a legally-binding agreement between you and your creditors, whereby you make one, affordable monthly payment.

Free Debt Help

The Money Advice Service is an impartial service set up by the government to help people manage their money. To find out more about free debt advice, debt counselling, debt adjustment and credit information services, visit www.moneyadviceservice.org.uk

Free Debt Help