How a Debt Management Plan works

A Debt Management Plan is usually set up by a third party provider, such as PayPlan.

Your DMP provider will work with you to understand your income and outgoings, and come up with an affordable payment amount. Learn more about how your DMP payment is calculated.

Once a realistic, affordable monthly payment has been set and you are happy to go ahead with the DMP, your provider will contact your creditors to explain your situation and tell them how much you’ll be paying them through the DMP.

With most DMP providers, you pay the agreed repayment amount to the provider, who will share out your payments between your creditors based on your level of debt with each. This is the case with DMPs with PayPlan.

Some providers may charge a set-up fee, a monthly fee or both. Providers, such as PayPlan, offer the whole service free of charge.

Because your repayments are based on your specific financial circumstances, your DMP provider will continue to monitor your financial situation to ensure any changes are factored into your payment. Should your circumstances change while you are in a Debt Management Plan, it’s important to tell your provider straight away, so they can offer advice.

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 a Debt Management Plan works

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

FAQs

FAQs

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