Debt Management Advice - Debt Advice Foundation
A Debt Management Plan (DMP) is an informal agreement between you and the people you owe money to. This means that unlike IVAs, DROs or Bankruptcy, they are not legally enforceable.

In a DMP, you may be able to negotiate lower repayments over a longer period but it’s important to recognise that your creditors are not legally obliged to agree to your proposal, freeze interest or suspend any pending legal action and in some circumstances, you may even end up owing more over time as interest accumulates. That’s why it’s important to get impartial advice on whether Debt Management is appropriate for your situation first.

You can negotiate with creditors yourself, seek assistance from a debt charity such as Debt Advice Foundation or contact a commercial debt organisation. There are two main types of DMP:

  • Fee charging – which is where you pay a management fee, typically between 10% to 15% of your monthly payment. Companies that charge fees argue that they provide a superior service, which justifies the additional cost.
  • Non-fee charging – which is where the full amount of your monthly payment goes towards paying off your debts. Because there is no monthly management fee to pay, your debts will be paid back sooner than if you used a fee charging company.

Debt Advice Foundation will never recommend a Debt Management Plan that charges a fee – see How long will my debt management program last.

If you need advice on DMPs, there’s no need to wait or book an appointment, our advisers are available Monday to Friday 8am to 6pm on 0800 043 40 50.

The advantages of debt management

  • You will be able to agree lower monthly repayments.
  • Some creditors will agree to freeze interest.
  • Your home is not at risk if you can keep up payments.
  • Friends, colleagues and family don’t have to know about it.

The disadvantages of debt management

  • It is not legally binding.
  • Not all creditors will agree to freeze interest.
  • The payback period will increase (you must make sure you’re happy with this).
  • All creditors must agree a way forward separately with you.
  • Any fees you pay will increase your debts.
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