What is a debt management plan?

A Debt Management Plan (DMP) is where a debt management company agrees with your creditors to pay back your debts with a regular fixed payment.

How does it work?

Depending on how much money you have left after your essential household costs, you could use it to pay your debts through a DMP.  

If you do this: 

• you make regular payments to the debt management company 
• the company shares the money out between your creditors.

Is a DMP right for me?

A DMP may be a good choice if you can afford to make regular payments and can pay your debts back in a reasonable time. 

However, in Scotland, a debt payment programme under the Debt Arrangement Scheme (DAS) is usually a better option. This is because interest and charges automatically stop. You also include priority and non-priority creditors, and you are protected from creditors taking enforcement action. It is a way of putting your debts together and making one monthly payment you can afford. You pay this to an approved payment distributor who sends the money to your creditors. 

Interest and DMPs

If you have a DMP, creditors do not have to freeze interest. The debt management company will try to persuade each creditor that it makes sense for them to freeze interest and charges to stop the debt increasing. 

Are DMPs free?

Some companies who offer to arrange DMPs charge a monthly fee. There is no need for you to pay for a DMP because you can get the same service from the free DMP provider we work closely with.  

If you are paying for a DMP it may be a good idea to move to a free provider. 

Can I move to a free DMP?

If you are paying for a DMP, you could move to a free DMP instead. If you move, all of the money you pay each month will go towards your debts.