Debt Management Plan (DMP)


  • No fees - free to client debt management plans (DMP) are available

  • CAB Money online (North East Derbyshire Citizens Advice offers a Free self-help DMP tool

  • Usually a minimum plan of £50 monthly

  • A direct debit or standing order is required to make payment

  • Periodic reviews required

  • No write off

  • Interest & charges may not be frozen, although many creditors will

  • Enforcement can still be applied

  • Assets are not protected

  • Priority debts are not usually included in plan

  • Debtor may have to administer offers & payments

  • Registered defaults will affect credit rating for 6 years in a self-help DMP

  • Creditors are not mandated to accept offer

  • Usually no write off, will usually take longer than other debt solution

  • Does not usually affect employment

How it works

There are free & fee charging debt management companies able to negotiate with your creditors & manage your payments to them. The arrangement the company negotiates for you with your creditors is called a debt management plan (DMP). Money Advice Hub recommends Payplan* as a trusted free DMP provider with no obligation, they can provide you with a free* debt management plan if that is your chosen option, we can refer you direct to them.

We can also advise you on free tools to set one up & manage it yourself, such as the Citizens Advice North East Derbyshire DMP tool.

All debt management companies must be licensed & regulated by the Financial Conduct Authority (FCA), you can search the FCA register here to check.

Some DMP firms will not charge you a direct fee for their services*, but will get donations from the creditors, for example out of the payments you make to them, this is known as Fair Share Contribution. Others may make an initial charge for preparing, negotiating & administering your plan & then take the rest from your monthly payments. In either case, before it asks you to sign up for a DMP, the company should give you details of any fees it wants to charge you, & how you must pay them.

A plan can last for 5 years or more, depending on how much you owe & what you can pay each month or quarter. Your debt management company should give you an estimate of how long the plan will last. They should also review the plan every year, & creditors will expect to be given regular updates of your income & spending so they can see whether you can increase your payments.


  • Fair & open way of sharing payments, widely understood by creditors

  • The debt management company will help you prepare your plan, including agreeing the level of your household & personal spending based on guidelines, which can then be used to put your case to the creditors.

  • The debt management company will negotiate with creditors on your behalf, so offers are more likely to be accepted & interest frozen than if you try to do this yourself.

  • You may be able to vary your payments if your circumstances change

  • You make single payments each month or quarter to the debt management company, which is responsible for administering all payments to your creditors.

  • Any monthly payment you make should be passed on to creditors within 5 working days.

  • Some debt management companies do not charge you a fee*

  • Creditors may be prepared to write off the balance of what you owe after a period of time if:

i) you have shown that you have made every effort to repay them as much as you can; &

ii) you have maintained regular payments to the debt management company

  • You can still have a basic bank account during a DMP.


  • The debt management company can’t force creditors to accept your proposal or freeze interest.

  • A plan is not binding on creditors who refuse to take part in it, but they can’t refuse to accept any payments made to them, even if they don’t agree with them.

  • You remain liable to pay your debts until they are paid in full.

  • Creditors could still take enforcement action against you, for example by getting a county court judgment &/or an order, which creates a charge on your home*, even if you are keeping up your payments under the plan, unless they agree not to do so.

  • You may not be able to make reduced offers if your circumstances worsen & you can no longer afford your agreed monthly payments.

  • A plan can last for several years. However, some creditors may be prepared to freeze interest for only a shorter time. If interest & charges cannot be frozen for the full length of the plan, then the total amount you end up paying under the plan could be more than the original amount of your debts, and could extend the lifetime of the plan.

*Having a charge on your home means that if you don’t repay the debt, the creditor has a claim on the proceeds if the property is sold, & if you do not adhere to repayment terms agreed, your home could be at risk of repossession.