Debt Management Plans

What is a Debt Management Plan (DMP)?

A typical Debt Management Plan (DMP) will consolidate all your unsecured debts into a single and more affordable monthly repayment. This should not be confused with the more formal and more conclusive process of an Individual Voluntary Arrangement (IVA).

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Is a Debt Management Plan (DMP) right for me?

  • Yes, if you are satisfied that you could repay your debts in less than five years if your creditors agreed to freeze interest and stop charges.
  • If you can’t pay off your debts in less than five years, you may be better off with an Individual Voluntary Arrangement (IVA).

In a Debt Management Plan (DMP), your debts are repaid to creditors on a pro-rata basis over an agreed period of time. This payment is determined by the amount you can reasonably afford after your normal cost of living has been deducted from your income, and will be presented to your creditors by a debt management company. Creditors are not obliged to agree to the Debt Management Plan, but they are more likely to accept it once they have been made properly aware of your true position.

Once your creditors have agreed to a DMP, it is your responsibility to continue paying the agreed payments to their administrator. The administrator (normally the debt management company who drafted the plan) will then ensure that these payments are distributed promptly, on a pro rata basis, to all creditors until the plan has been successful completed.

Each DMP should be regularly reviewed, especially to consider whether creditors would accept early settlement. Once a DMP is completed, you will be considered debt free and able to make a fresh financial start.

Before you take out a DMP, make sure that you use a fully licensed debt management company that adheres to the DTI's debt management guidelines. Establish any charges that you will have to pay for their services, and ask to see evidence that they are trying to, or have already secured a freeze on all charges and interest, making sure that this continues throughout the DMP.

Call free on 0800 088 7505 to find out more or get help with applying for an Debt Management Plan (DMP). Alternatively you can read the Debt Management Plan (DMP) FAQ's.