What Is a Debt Management Plan (DMP)?

If you’re struggling to manage your monthly debt repayments, a Debt Management Plan (DMP) could be a useful way to regain control — without taking out more credit or declaring bankruptcy.

A DMP is an informal arrangement between you and your creditors to repay your debts at a more affordable monthly rate. A DMP provider works with your creditors to reduce your payments based on your circumstances — helping you stay on track without financial hardship.

This page explains how DMPs work, what the pros and cons are, and how Fresh Start can help you decide whether a DMP is suitable.

How Do You Set Up a Debt Management Plan?

We’ll discuss your available options based on your situation. If a DMP is suitable, we can refer you to a trusted third-party provider. They will communicate with your creditors on your behalf, and set up a plan that works for you.

You’ll then make one affordable monthly payment based on your income and expenses. The provider may also ask your creditors to freeze interest and charges — though this is not guaranteed.

What Are the Fees For?

Fees can cover administration of your plan, setting up communication with creditors, requesting charges be frozen, and handling your monthly payment. You’ll also usually receive an annual financial review.

Can I Pay Off My DMP Early?

Yes. Since a DMP is not legally binding, you’re free to make larger payments or settle debts early if your situation improves — for example, through a pay rise or lump sum payment.

Benefits of a DMP

• ✅ Flexible monthly payments based on what you can afford
• ✅ One simple payment to cover multiple debts
• ✅ Unsecured debts cleared once the plan is complete
• ✅ In many cases, creditors stop interest and charges
• ✅ You may stop getting calls from creditors and collectors

Disadvantages of a DMP

• ❌ Creditors are not legally required to accept the plan
• ❌ Your credit rating may be affected for up to 6 years
• ❌ Secured debts (like mortgages) are not included
• ❌ You must repay debts in full — no write-off
• ❌ It may take longer to pay off debts due to lower payments

Example of How a DMP Works

Here’s a typical case study showing how a Debt Management Plan can make repayments more affordable and reduce stress:

Before DMP: Monthly payments: £465
After DMP: Monthly payments: £160
Monthly saving: £305
Debt written off: Not applicable – all debt repaid in full

Note: Interest and charges may be frozen, but this is not guaranteed. All DMPs are subject to your creditors’ agreement and your personal financial circumstances.

Still Not Sure If a DMP Is Right?

A Debt Management Plan isn’t your only option. You may want to compare other solutions like:

• Individual Voluntary Arrangement (IVA)
• Debt Relief Order (DRO)
• Bankruptcy
• Compare IVA vs DMP vs Bankruptcy

Every case is unique — and we’re here to guide you to the right option for your situation. No pressure, no obligation.