A Debt Management Plan (DMP) is an informal arrangement to repay debts at a reduced monthly amount. It’s one of the most popular debt solutions in the UK — about 200,000 people are in a DMP at any given time. Here’s how it works.
How a DMP Works
- Contact a DMP provider (free providers recommended)
- They assess your income and expenses
- Calculate an affordable monthly payment
- Negotiate with creditors to accept reduced payments
- Interest and charges may be frozen
- You make one payment to the provider, who distributes to creditors
- Continue until debts are repaid in full
DMP Example
| Before DMP | After DMP |
|---|---|
| 4 creditors, 4 payments | 1 payment to provider |
| Total minimum: £450/month | Affordable payment: £200/month |
| Interest: 22–35% | Interest: often frozen |
| Payoff: never at minimums | Payoff: 5–8 years |
Free vs. Fee-Charging DMP Providers
| Provider Type | Cost | Examples |
|---|---|---|
| Free (recommended) | £0 | StepChange, PayPlan, Christians Against Poverty |
| Fee-charging | 15–25% of payments | Various commercial providers |
Always use a free provider. Fee-charging companies take money that should go to your creditors.
DMP vs. Other UK Debt Solutions
| Factor | DMP | IVA | Bankruptcy | Debt Relief Order |
|---|---|---|---|---|
| Type | Informal | Formal (legal) | Formal | Formal |
| Debt written off | No | Yes (typically 25–50%) | Yes (most) | Yes (most) |
| Duration | Until repaid | 5–6 years | 1 year | 1 year moratorium |
| Credit impact | 6 years | 6 years | 6 years | 6 years |
| Assets at risk | No | Maybe (home equity) | Yes | Must have <£2,000 assets |
| Best for | Can repay in 5–10 years | £10K+ debt, can’t repay in full | Overwhelming debt | Low income, under £30,000 debt |
Who Should Get a DMP?
A DMP is right if you:
- Can repay your debts in full (just need more time)
- Have £5,000–£30,000 in unsecured debt
- Can afford at least £100/month toward debts
- Want to avoid formal insolvency (IVA/bankruptcy)
- Need interest frozen to make progress
Bottom Line
A DMP is the least severe UK debt solution — you repay everything owed, just at a slower pace with frozen interest. Always use a free provider like StepChange or PayPlan. If you can’t realistically repay in 8–10 years, consider an IVA or bankruptcy instead.
See our guide to getting out of debt in the UK for all options.