Overview
A Debt Management Plan is an agreement between you and your creditors to pay all of your debts.
Debt management plans are usually used when either:
- you can only afford to pay creditors a small amount each month
- you have debt problems but will be able to make repayments in a few months
Work out your budget
Firstly, you will need to understand how much money you have coming into the household and how much you have going out each month. This is your budget and it will enable you to see how much money you have leftover at the end of the month to pay towards your debts you can work out your budget by completing a Personal Budget Sheet
Free debt management plans
You can arrange a plan with your creditors yourself or through a charity such as StepChange or PayPlan. Charities do not charge for this service although some other companies may charge a fee (often as much as £55.00/month.)
Debt Management Plans can only be used to pay ‘unsecured’ debts, for example debts that have not been guaranteed against your property.
What your creditors might do
A Debt Management Plan may affect your credit rating. A DMP is not a formal agreement so creditors do not have to accept the proposal and they can continue to register defaults until you have repaid all your debt. With a DMP, your credit rating could be affected for up to a maximum of six years from the date of the last Default Notice issued against you, which your creditors can issue at any point during the plan like they can with legal action.
Last Updated on June 10, 2026 by Ashford Advice