An informal way to repay your unsecured debts in full through one reduced monthly payment. We don’t provide DMPs — free plans are available from debt charities.
A Debt Management Plan is used to manage your unsecured debts into one affordable monthly payment. The DMP provider asks your creditors to accept reduced payments and usually deals with them on your behalf.
IVA Advice Online and My Debt Plan Ltd do not provide debt management plans, negotiate with creditors on a DMP or handle payments to your creditors. DMPs are offered free of charge by debt charities such as StepChange and PayPlan, and by fee-charging commercial firms, which must be authorised by the Financial Conduct Authority. If you contact My Debt Plan Ltd and a DMP would suit you better than an IVA, we may refer you to a partner firm and receive a payment for the introduction if you take out a plan with them.
A DMP is an informal arrangement, so there’s no contract tying you in — you can withdraw at any time, but so can your creditors. Creditors aren’t obliged to freeze interest and charges, which can extend how long the plan takes. Your credit rating could be affected, as you’ll be paying less than your original agreements.
A DMP is an informal arrangement to repay your non-priority unsecured debts — credit cards, personal loans, overdrafts, catalogue and store accounts — through a single reduced monthly payment instead of paying each creditor separately.
The payment is set by your budget: essential living costs come first, and what's genuinely left over goes into the plan. That money is then split between your creditors pro rata, in proportion to the size of each debt, so a creditor owed a third of your total receives roughly a third of each payment. Creditors are asked to freeze interest and charges while the plan runs.
Because it's informal, nothing is legally binding. You can change or stop the plan if your circumstances shift — and equally, your creditors aren't obliged to accept it or to stick to it. Our full explainer covers this in detail: what is a debt management plan?
A DMP tends to be a good fit where the problem is affordability rather than scale — the total is manageable, you just can't meet the contracted payments right now.
It's a weaker fit where the total is simply too large for what you can pay. If a plan would run for a decade or more, or a creditor won't freeze interest and the balance isn't falling, a formal solution usually costs less overall.
Priority debts sit outside a DMP entirely, because the consequences of not paying them are more serious than for a credit card. These must be dealt with separately and kept up alongside the plan:
A DMP also writes nothing off. You repay what you owe in full — the plan simply spreads it over a longer period at a rate you can manage.
You should not have to pay for a debt management plan. Charities including StepChange and PayPlan set them up and run them free of charge, and you can run one yourself using the free template letters and budgeting tools at National Debtline. A commercial provider's fee comes out of your monthly payment, which means less reaches your creditors and the plan runs longer.
Free, impartial guidance on all your options is available from MoneyHelper and Citizens Advice.
| DMP | IVA | DRO | |
|---|---|---|---|
| Type | Informal | Formal, binding | Formal, binding |
| Creditors bound? | No | Yes, once approved | Yes |
| Interest frozen? | Requested, not guaranteed | Yes | Yes |
| Debt written off | None | Qualifying debt at the end | After 12 months |
| Term | Until repaid | 5–6 years | 12 months |
| Public register | No | Yes | Yes |
The comparison most people need is between a DMP and an IVA, and we go through it properly — with a worked example — in IVA vs DMP: which is best?. If you have little spare income and few assets, a debt relief order may be the cheaper route, and where there's no realistic prospect of sustained payments, bankruptcy can be cleaner than either.
Plenty of people start on a DMP and move to an IVA later, usually after a year or two when it becomes clear the balance isn't shifting. That's a normal progression, not a failure — the payments you've made have reduced what you owe, and a track record of keeping up can help when creditors vote on a new proposal.
The check to run once a year is simple: has your total debt actually fallen over the last twelve months? If it hasn't, the plan isn't doing its job and it's worth looking at the alternatives.
It can be, where your difficulty is temporary and the balances are clearable within a few years. It's a poor fit when the debt is large relative to what you can pay, because a DMP repays in full and can run for a decade or more.
No. A DMP is informal, so creditors aren't legally bound. Most accept a reasonable offer, but any of them can decline to freeze interest, pass the debt to a collection agency or apply for a CCJ.
As a general guide, above around £2,000 of unsecured debt owed to two or more creditors, with a regular monthly amount available after essential bills. It's a guide rather than a rule.
Neither is universally better. A DMP is flexible and private but offers no legal protection and writes nothing off. An IVA binds creditors, freezes interest with certainty and has a fixed end date, but is a formal insolvency procedure on a public register.
Yes. Debt charities including StepChange and PayPlan provide DMPs at no cost, and you can run one yourself with free resources from National Debtline.
Talk to My Debt Plan about your options. Free, impartial advice is also available from MoneyHelper.
Free, independent debt advice is also available from MoneyHelper, StepChange, National Debtline and Citizens Advice.
