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What is a DMP?
A debt management plan (DMP) is a flexible agreement to pay off your debts at a rate you can afford.
It’s an informal agreement between you and your creditors to give you longer to pay back your non-priority debts (credit cards, loans, store cards, buy now pay later etc.)
You make one affordable monthly payment and this is divided between your creditors.
A debt management plan is not legally binding and informal. This means you can cancel it at any time.
For your creditors to agree to a debt management plan, you:
- will need to have enough money left after you’ve covered your essential living costs each month to be able to afford to pay something towards your debts
- must be in a position to make payments that are high enough to clear your debts in a reasonable amount of time
- must not have enough disposable income to be able to pay off your debts within six months
Benefits
- Get more time to repay your unsecured debts – credit cards, loans, overdrafts etc.
- Make one affordable monthly payment towards all of your unsecured debt.
- You’ll be left with enough money to cover all your essential living costs.
- We’ll ask your lenders to freeze interest and charges.
Disadvantages
- It’ll take you longer to repay your debt.
- We’ll need to check a DMP is suitable. If not, we’ll suggest other ways to deal with your debt.
- We can’t guarantee your lenders will accept lower payments or freeze interest and charges but they normally do.
- Your credit rating may be affected.
