How your DMP payment is worked out

What affects the amount you pay into a DMP?

Your DMP payment is based on two things:

How much money do you have coming in
How much do you need to spend on essentials

The amount left after your essential costs are covered becomes your affordable monthly payment towards your unsecured debts.

What income is included when calculating a DMP?

We review your regular income from all sources, including:

Wages or salary
Benefits
Pensions
Any other money coming in

This helps make sure your payment reflects what you can realistically afford without being left short.

See if a DMP is right for me

What costs are allowed in a DMP budget?

We look at your essential outgoings, which may include:

Rent or mortgage
Utility bills
Food and clothing
Travel costs
Household expenses
Childcare

Secured debts and priority debts aren’t included in your DMP. You’ll need to keep paying these separately and stay up to date with them.

Learn more about the difference between priority and non-priority debts.

How are DMP payments calculated?

The basic calculation is:

Total income – essential costs = your affordable DMP payment

You then make one monthly payment into your plan. We distribute this fairly among your creditors based on what they are owed.

Will my DMP payment stay the same?

Your plan should always remain affordable. We’ll review your situation at least once a year to check your payment is still appropriate. If your circumstances change at any point, please let us know as soon as possible.

If things improve and you can afford to increase your payment, your plan may finish sooner.

Until we’ve reviewed your situation, please continue making your regular payment wherever possible.

Thinking about a DMP but unsure what’s right for you?

Get debt help online or call us on 0800 316 1833 for a confidential chat. We’ll help you understand your options and what a realistic monthly payment could look like.

See if a DMP is right for me

Table of contents

FAQs

Why do I have to change my bank account?

If you have a current account with a company you owe money to, you will be required to open a new bank account. This is not only the case with a DMP but you should change your bank account if you are going to make reduced payments to a company that you also bank with. Banks have the “Right to Offset” so any money in your current account could be used to pay another debt with the bank.

Will I have to live on a tight budget during my Debt Management Plan (DMP)?

To enter into and maintain a successful Debt Management Plan you will need to live within a budget, however this is discussed with you openly. PayPlan are required to submit your income and expenditure details to your creditors.

Remember that when we’re negotiating your DMP, it is in your interest if we can show your creditors you are prepared to stick to a realistic budget to help repay your debts.

Will I have to tell my partner about the Debt Management Plan (DMP)?

We offer an absolutely confidential service from start to finish, so PayPlan will never force you to tell your partner about your debt situation, although support is available if you wish to tell them.

A DMP doesn’t usually affect your partner’s credit rating, but if you have a financial association, such as shared debts or guarantor debts, then it could do.

Whenever we contact a client we take great care to avoid divulging the nature of our call to anyone but the client.

Which debts are included in a Debt Management Plan (DMP)?

A DMP will only help you make reduced payments to your unsecured creditors, therefore the debts that can be included are:

Personal loans (loans taken to purchase cars are fine but Hire Purchase (HP) agreements cannot be included as they are secured against the item being purchased)
Credit cards
Store cards
Catalogues
Overdrafts

Secured debts can’t be included in DMPs because any payments on secured debts that aren’t met in full, can lead to the goods being repossessed. This website provides details on house repossession and car repossession, which are all consequences of not maintaining mortgage or hire purchase payments.

Is my home at risk if I enter into a Debt Management Plan (DMP)?

A Debt Management Plan is an informal arrangement which is not legally binding and although having a DMP could reduce the chance that the property would be at risk, there is a chance a creditor could take legal action such as securing a charging order on the property. This would secure the debt and a creditor could force the sale of the property at any point during a debt management.

FAQs

Why do I have to change my bank account?

Will I have to live on a tight budget during my Debt Management Plan (DMP)?

Remember that when we’re negotiating your DMP, it is in your interest if we can show your creditors you are prepared to stick to a realistic budget to help repay your debts.

Will I have to tell my partner about the Debt Management Plan (DMP)?

A DMP doesn’t usually affect your partner’s credit rating, but if you have a financial association, such as shared debts or guarantor debts, then it could do.

Whenever we contact a client we take great care to avoid divulging the nature of our call to anyone but the client.

Which debts are included in a Debt Management Plan (DMP)?

A DMP will only help you make reduced payments to your unsecured creditors, therefore the debts that can be included are:

Personal loans (loans taken to purchase cars are fine but Hire Purchase (HP) agreements cannot be included as they are secured against the item being purchased)
Credit cards
Store cards
Catalogues
Overdrafts

Is my home at risk if I enter into a Debt Management Plan (DMP)?

How your DMP payment is worked out

What affects the amount you pay into a DMP?

What income is included when calculating a DMP?

What costs are allowed in a DMP budget?

How are DMP payments calculated?

Will my DMP payment stay the same?

Thinking about a DMP but unsure what’s right for you?

FAQs

FAQs

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