What is a Debt Management Plan?

A Debt Management Plan is an agreement that is made between you and your creditors to help control and pay all your debts.

Debt management plans are usually used when either:

- you can only afford to pay creditors a small amount each month.
-you have debt problems but will be able to make repayments in a few months.

You can arrange a plan with your creditors yourself or through a licensed debt management company for a fee. If you arrange this with a company: you make regular payments to the company. The company shares the money out between your creditors.

Benefits

One affordable payment to the DMP company – if you use a licenced debt management company.
Flexible – payment can move, increase or decrease depending on circumstances.
Creditors may agree to reduce payments and freeze interest and charges, but are not obliged to.
Certain charities and organisations will do this free of charge, you can contact the MAS for more information.

Risks

Your debt is not fully written off unlike an IVA, Trust Deed, or Bankruptcy
Only interest and charges can be frozen, but there is no guarantee
We cannot provide any legal protection from your creditors
It could take many years to fully pay off your debts as you will be making lower monthly payments
It will affect your credit rating