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How to apply for a debt management plan (DMP)

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In short. List every unsecured debt and your household budget, contact a free FCA-authorised debt charity to negotiate lower payments with creditors, then make one monthly payment to the provider who distributes it until the debts are cleared.

A debt management plan (DMP) is an informal arrangement where you pay what you can afford each month toward unsecured debts such as credit cards, personal loans, and overdrafts. Creditors are not legally obliged to accept reduced payments, but many do when a reputable provider negotiates on your behalf. For background on how DMPs compare with other options, see our guide to debt management plans (/debt-help/debt-management-plans-explained/).

Last reviewed:

·Estimated time: 28 days

The steps

  1. 01

    Confirm a DMP suits your situation

    DMPs work best when you have unsecured debts you cannot repay in full on current terms but can afford reduced monthly payments. They are not suitable for priority debts you cannot afford at all, or when you need legal protection from creditors — an IVA or bankruptcy may be more appropriate. Check gov.uk guidance on debt options first.

    Official link →

  2. 02

    Prepare a full household budget

    Gather three months of bank statements, payslips, benefit letters, and bills. List every income source and essential cost: rent or mortgage, council tax, utilities, food, transport, and childcare. What remains after essentials is your disposable income — this determines your DMP payment.

  3. 03

    List every unsecured debt

    Write down each creditor, account number, outstanding balance, minimum payment, and interest rate. Include credit cards, store cards, catalogue debt, personal loans, and overdrafts. Do not include secured debts like mortgages or hire purchase on cars unless advised otherwise.

  4. 04

    Contact a free FCA-authorised debt charity

    Use a non-profit provider such as StepChange, National Debtline, or PayPlan — never pay an upfront fee to a commercial debt management company. The adviser reviews your budget, confirms whether a DMP is appropriate, and explains the impact on your credit file and any assets.

    Official link →

  5. 05

    Review the proposed payment plan

    The provider calculates an affordable monthly payment and proposes reduced payments to each creditor. Ask which creditors have agreed, which are pending, and whether interest and charges will be frozen. Some creditors refuse or continue adding interest — the adviser should explain what that means for your timeline.

  6. 06

    Sign the DMP and set up your payment

    Once you agree, the provider contacts your creditors and sets up a single monthly payment — usually by direct debit to the DMP provider, who distributes it. Keep paying priority debts (rent, council tax, energy court orders) separately; they are not covered by the DMP.

  7. 07

    Monitor statements and update the provider

    Check creditor statements to confirm payments arrive. Tell your provider immediately if your income drops, you receive a windfall, or a creditor contacts you directly. Annual reviews adjust payments when circumstances change.

Common pitfalls

  • Paying a commercial firm upfront for a DMP you could get free from StepChange or National Debtline wastes money you need for creditors
  • Stopping payments to priority debts to fund a DMP risks eviction, bailiffs, or disconnection — rent, council tax, and court fines come first
  • Assuming all creditors will freeze interest — some continue charging, which lengthens the plan and should be factored into your decision

FAQ

Will a DMP affect my credit score?
Yes. Reduced payments are usually recorded as partial settlements or arrears on your credit file for six years. However, clearing debt through an affordable plan is often better than missing payments without a formal arrangement.
Can creditors still chase me during a DMP?
Most stop contact once they accept the plan, but because a DMP is informal they can still take court action. Reputable providers negotiate with major creditors to reduce this risk.
How long does a DMP last?
Typically five to ten years depending on debt levels and how much you pay. If your income rises, you may be asked to increase payments; windfalls may need to be shared with creditors.
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