TL;DR
Debt management plans are available free through charities including StepChange and National Debtline. Fee-charging firms take a proportion of payments as fees, reducing the amount reaching creditors
Last reviewed: June 2026 | Sources: Debt & Credit
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Debt & Credit Key Facts: Debt Management Plans Free providers: StepChange, National Debtline, CABFee-charging firms: typically 15-20% of monthly paymentCredit file impact: DMP recorded for 6 yearsCreditor consent: not legally requiredRegulator: FCA |
What a debt management plan is
A debt management plan is an informal arrangement between a borrower and their unsecured creditors to repay debts at a reduced monthly rate over an extended period. DMPs are negotiated by a debt management company on the borrower's behalf. They are not legally binding on creditors, who can withdraw from the arrangement, but most creditors participate in established DMP frameworks.
The risks most people do not check
Fee-charging firms reduce the money reaching creditors. Fee-charging DMP providers typically charge 15 to 20 percent of the monthly payment as their fee. On a £300 monthly DMP payment, £45 to £60 goes to the firm rather than creditors, extending the time to repay the debt. Free providers at StepChange, National Debtline and Citizens Advice provide the same service at no cost.
Interest and charges may not be frozen. Creditors are not legally required to freeze interest during a DMP. Most mainstream creditors do freeze interest when a DMP is arranged through an established provider, but this is not guaranteed. Interest continuing to accrue during a DMP can undermine the repayment plan.
A DMP is recorded on your credit file. A DMP marker appears on your credit file and remains for six years from the date the arrangement was made. This affects credit applications during that period.
It is not suitable for all debt types. DMPs cover unsecured debts only. Priority debts including mortgage arrears, rent arrears, council tax and utility debts require separate management. Addressing priority debts first is essential before entering a DMP for unsecured obligations.
What to verify before entering a DMP
Obtain free advice from StepChange or National Debtline before approaching any fee-charging provider. Confirm which creditors will participate and whether they will freeze interest. Understand how long the DMP will take to complete and the total amount repayable. Ensure all priority debts are being managed separately.
Where to complain
Fee-charging DMP firms are regulated by the FCA. Complaints about mis-selling, excessive fees or poor service go to the Financial Ombudsman Service.
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Disclaimer This article is for information only and does not constitute regulated financial advice. Always verify current terms with relevant providers and seek regulated advice for your specific circumstances. Kael Tripton Ltd is an independent editorial publisher and is not regulated by the FCA. |
Frequently asked questions
Is a DMP legally binding?
No. A DMP is an informal arrangement that is not legally binding on creditors. Creditors can withdraw, demand payment in full or take legal action despite a DMP being in place. Most mainstream creditors participate but there is no legal compulsion.
What is the difference between a DMP and an IVA?
A DMP is an informal arrangement with no legal status. An IVA is a formal insolvency procedure overseen by a licensed insolvency practitioner that is legally binding on creditors once approved. An IVA typically writes off a portion of debt; a DMP repays all debts in full over an extended period.
Will creditors freeze interest during a DMP?
Most mainstream creditors freeze interest when a DMP is arranged through an established provider. This is not a legal requirement and some creditors, particularly non-mainstream lenders, may continue charging interest. Confirm interest treatment with each creditor before entering the DMP.
Can I get a mortgage while on a DMP?
Most mainstream mortgage lenders will not lend to borrowers currently in a DMP. Some specialist lenders may consider applications but at significantly higher rates. A DMP marker remains on the credit file for six years from the arrangement date.
How do I find a free DMP provider?
StepChange Debt Charity, National Debtline and Citizens Advice all provide free DMP services. Contact them directly rather than responding to advertisements which typically lead to fee-charging providers.
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Sources StepChange: Debt Management Plans |
