You make reduced monthly payments towards your debts. This means a DMP is suitable for people struggling to keep up with their normal debt payments but still have money available after all essential living expenses are paid.

A DMP may be suitable for you if you can still afford to make payments towards your debts, after you create a budget to cover essentials such as food, utilities, and transport.

A DMP is usually arranged on your behalf by a third-party provider, for example a debt charity or debt management company. This means you will make a single monthly payment to the DMP provider and they will contact all your creditors and send each of them a share of your payment every month.

Unsecured debts will be included in your DMP. This includes things like personal loans, store card debts and overdrafts. Priority debts, like most household bills, your mortgage, or a debt where court action has already been taken, will not usually be included in a DMP, and you should keep paying these at the agreed amount.

Creditors can still contact you during your DMP and can continue the debt collection process. Creditors can still take action against you during the DMP and frozen interest & charges on debts is not guaranteed.

A DMP is not explicitly registered on your credit file, but the reduced payments could impact a few different areas of your credit file. Details of court action, defaults or missed payments will be removed six years from the date it happened, even if the debt has not been fully repaid.

You should not take out any further credit while trying to repay your debts through a DMP. Doing so could be a “breach” of your DMP agreement, as you cannot make the minimum payments on your debts.

Your credit history is likely to be affected by being on a DMP. However, it will not affect the people you live with unless you have joint financial products or debts. This would be something like a loan, bank account or household bills that are in joint names. A financial association’ will link your credit files if this happens. Your record of making reduced payments may affect the other person’s credit file and their ability to get credit.

Unlike bankruptcy, DMPs are available across the UK. So regardless of where you live in the UK, if you are struggling to keep up with payments to your debts, a DMP could help you to get your financial situation back on track.

You can apply for a DMP by clicking here.