Debt Management Plan (DMP) – What is it?

A Debt Management Plan (DMP) is when you reach an agreement with your creditors to repay your debts, in full, at a lower rate that is more affordable to you. This agreement, unlike an IVA, is informal. As it is an informal arrangement, you are not tied into any contract and there is no timescale. You can opt out of the agreement at any time, for example when you are in a better financial situation. It also allows your creditors to control your agreement and is unprotected, unlike an IVA.

Under a DMP you make reduced payments against your full debts. So, it may take longer to clear your debts. Creditors may also charge interest while in a DMP, interest is frozen when you are in an IVA.

 

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