What is a Debt Management Plan?
A Debt Management Plan (DMP) is an informal arrangement to repay what you owe at a reduced monthly rate, with a single payment divided between your creditors. You can arrange one yourself by negotiating directly with your creditors, though many people choose to use a regulated debt management firm or a debt charity to set it up and manage it on their behalf.
Because a DMP is informal, creditors are not legally bound by it. They do not have to freeze interest or charges, and they can continue to contact you, although in practice many will agree to accept reduced payments. No debt is written off under a DMP — the full amount owed is repaid, so a plan may run for a long time.
A DMP is not recorded on the public Insolvency Register, but that does not mean your credit file is unaffected. Creditors remain free to update your credit record throughout, which may include recording missed, reduced or defaulted payments, so obtaining new credit is likely to be difficult while a plan is running.