Debt Management Plan (DMP): How It Works, Pros & Cons

Debt management plans explained: how a DMP works

A debt management plan lets you repay non-priority debts with one affordable monthly payment. How DMPs work, free vs fee-charging providers, the effect on your credit file and why a DMP doesn't stop bailiffs for priority debts.

Written byClaire WhitmoreLead writer, debt and enforcement

Fact-checked: Against official sources
Last updated: 19 October 2026
Next review due: April 2027
Applies to: England and Wales
Sources: 3 listed on this page

Independent guidance, not a government service. This page is general information about the law in England and Wales, not financial or legal advice. Debt solutions have fees, risks and consequences. For free, impartial advice, contact MoneyHelper or a debt charity.

The short answer

A debt management plan (DMP) is an informal arrangement where you make one affordable monthly payment, which a provider shares between your non-priority creditors. You still repay in full, just more slowly. Creditors often freeze interest, but they don’t have to, and a DMP isn’t legally binding, so it doesn’t legally stop court action. DMPs are available free from debt charities.

How a DMP works

A provider looks at your budget and works out what you can afford for your non-priority debts after essentials and priority bills.
They contact your creditors and ask them to accept reduced payments and freeze interest and charges.
You make one monthly payment to the provider, who pays your creditors.
The plan is reviewed regularly, and payments can go up or down if your circumstances change.
The plan ends when your debts are repaid, or when you switch to another solution.

Which debts can go in a DMP?

Non-priority debts such as credit cards, store cards, personal loans, overdrafts, catalogues, buy now pay later and payday loans.

Priority debts such as council tax, rent, mortgage, energy and court fines are usually not included. You deal with them separately, first. Read priority debts.

That’s why a DMP isn’t usually the answer if bailiffs are chasing you for council tax. For that, see how to stop bailiffs.

Pros and cons

Pros	Cons
One affordable payment	Not legally binding
Flexible: easy to change or stop	You repay everything, so it can take many years
Free from charities	Creditors don’t have to freeze interest
No public register	Defaults and arrears show on your credit file
Your home isn’t affected	Doesn’t stop court action or bailiffs for priority debts

Free vs fee-charging DMPs

Debt charities such as StepChange and other free providers set up DMPs at no cost. Some commercial firms charge set-up and monthly fees, which means less of your money goes to your creditors. All DMP providers must be authorised by the FCA. Read is debt help really free?

When a DMP isn’t the right choice

You can’t repay in full within a reasonable time – an IVA, DRO or bankruptcy may be better.
Your creditors won’t freeze interest, so your debts aren’t going down.
You need legal protection from enforcement.

Compare options in IVA vs debt management plan and debt solutions compared.

Most DMPs are made up of card and loan debts – see can’t pay your credit card?

Before you choose a debt solution

This article is general information, not personal advice. Rules differ in Scotland and Northern Ireland.
This is an independent website. It is not a government website or service, and it is not connected to any council, court or enforcement company.
Debt solutions such as IVAs, DROs and bankruptcy affect your credit rating for six years. Some have fees, and some can affect your home.
An IVA is not a government scheme, and no one can promise how much debt will be written off.
Free, impartial debt advice is available from MoneyHelper, StepChange, National Debtline and Citizens Advice.
We are not a debt advice provider and we do not give debt advice. With your permission, we introduce you to an FCA-authorised debt advice firm that can discuss your situation and your options. We may receive a fee from that firm for the introduction. This does not affect the advice you receive or what you pay.

Frequently asked questions

Does a DMP affect my credit rating?

Yes. Reduced payments and defaults will show on your credit file, usually for six years from the default date.

Can I include council tax in a DMP?

Usually not. Council tax is a priority debt and should be dealt with directly with the council.

Can creditors still take me to court during a DMP?

Yes, because a DMP isn’t legally binding, although most creditors don’t if you’re paying regularly.

Sources

How we wrote this article

Research: written from primary sources such as legislation.gov.uk, GOV.UK and the Insolvency Service, then fact-checked by a second member of our team. The sources are listed above.

Checked: last checked on 19 October 2026. Next review due April 2027, or sooner if the rules change.

Scope: applies to England and Wales. If you live in Scotland or Northern Ireland, read our Scotland and Northern Ireland guide. It is general information, not personal advice.

Independence: we are not a government website or service, and we are not connected to any council, court or enforcement company.

Money: we may receive a fee if we introduce you to a debt advice firm. This doesn't change what we write. How we're paid.

Spotted something wrong or out of date? Email hello@howtostopthebailiffs.co.uk and we'll check it. Read our full editorial policy.