How does it work?
We work out what money you have left over to repay your debts after covering your living costs – things like your food, housing, and utility bills. We will check the information you gave us, and if we have any questions or need more details, we will contact you.
You make one monthly payment to us, and we share this between the people you owe money to.
What are the benefits of a DMP?
- You pay us once a month, and we pay your creditors for you
- We don't ask for any extra money for your plan, so all the money you pay goes to repaying your debts
- Interest and charges on your debts are often stopped
- Payments to your less important debts will be reduced. This makes it easier to pay for your essential living costs
What are the risks of a DMP?
- People you owe money to might still want payments, but you only pay what you can afford
- People you owe money to might still take further action against you to recover the debt
- You will be making reduced payments to your debts, so this will affect your credit file
Important information about DMPs
It may take longer to repay what you owe than if you were making full agreed payments, also called contractual payments.
If you are making payments to clear any money which is:
- Overdue on an important payment, (we may have called this priority arrears) and is also:
- Not included in your DMP payments
Let us know when you have repaid these debts.
You can change how much you are paying if things change. You can update your budget to work out what you can afford based on your new circumstances.
While you are on a DMP we ask you to keep up with your usual payments, for example utility bills, rent and council tax.
You need to review your finances at least once a year, with us. This makes sure your DMP is still right for you and gives people you owe money to a regular update.
If you have a debt that is linked to your day-to-day bank account (for example an overdraft), talk to your bank and ask them to separate the linked debts from your day-to-day account.
You can change banks if you feel they cannot help, or if you want to move away. It could be a risk to keep the account as it is. Your bank might stop the account or use the ‘right of set-off’ to take money from it.
What types of debt are included in a DMP?
Your single monthly DMP payment to us helps to repay your less important, or non-priority debts. It can also help you repay any priority arrears if you have them.
If you are behind with your important payments such as utility bills, rent or mortgage, and have arrears, we can add those to your DMP and include them in your monthly payment. This will help you manage important payments better.
What types of debt are not included in a DMP?
Your DMP does not include your important payments, or priorities, such as:
- Secured debts, for example, mortgages, secured loans and hire purchase on vehicles
- The regular payments for rent, council tax or rates, and utility bills
- Any other important debts not listed in 'What types of debt are included in a DMP?' above
You should make monthly payments to these directly to the creditors.
If you have fallen behind on any of them, you can include the arrears in your DMP. But you should continue to make your ongoing monthly payments for these important bills directly to your creditors. This includes payments such as the ongoing usage for utility costs.
Please be aware:
- Even if you are on a DMP, your creditors may still ask you to pay them. However, it is important to follow the plan and make payments through the DMP, which ensures you only pay what you can afford
- Paying back what you owe might take more time than if you paid the full amount you agreed to
- You are still liable for your debts on a DMP, and the people you owe to could still try to get their money back
- Your credit file may be affected because of the payments made through a DMP. See the section ‘how will my credit file be affected’ for more help
What happens when you send my payment offer to my creditors?
We have got over 30 years’ experience in helping people repay their debts. Over this time, we have built good relationships with creditors. They know how we work and are usually happy to work with us.
Most creditors will stop adding interest and charges once you are on a plan with us. However, some may continue to add them.
To find out what your creditors can and cannot do, read our guide to dealing with creditors.
Creditors cannot return the DMP payments we send to them. Even if they reject the payment offer, they will always credit the payment to your account. However, they can still take further action to recover the money you owe.
Sometimes they may ask you to pay more than they are getting through your DMP arrangement. You should not pay more than you can afford so do not feel pressured.
Just carry on as normal with your DMP. If your creditors have any concerns about your payments, ask them to contact us.
Creditors may sometimes pass your debt to a different company or debt collection agency. This is nothing to worry about.
If you get letters from companies saying they have taken over a debt, just log into OnlineDMP and give us their details. Or you can ring us if you prefer. We will contact them and start sending them payments.
How will my credit file be affected?
The payments you will make through your DMP are smaller than the amounts you first agreed to with the people you owe money to, (called contractual payments.) These DMP payments will be recorded as ‘partial payments’ on your credit file.
If you miss a payment your creditors can report it on your credit file. When you continue to miss payments, you will be at risk of your accounts ‘defaulting’. This will also be shown on your credit file.
These issues may affect your ability to obtain credit in the future.
What happens if my circumstances change?
If your situation changes, we will support you to see if a DMP is still an option for you. We will look at your new circumstances, with you, and give you advice on the best way to deal with your debts.
If your situation changes, get in touch with us to update your details and budget.
Can I cancel my debt management plan?
If you choose not to continue with your DMP, you can cancel it by contacting us. We will stop taking payments. We will let your creditors know when you cancel your DMP.
After this, you will need to get in touch with your creditors, otherwise they may then start to add interest and charges. They may also take action to get back the money you owe. This may affect your credit file.
You need to review your finances at least once a year, with us. This makes sure your DMP is still right for you and gives people you owe money to a regular update.
If you do not review, we may cancel your DMP. We will try our best to contact you before stopping your DMP.
Your debt management plan payments are protected
While we hold your money, it is covered by the Financial Services Compensation Scheme, which can pay compensation if we are unable to meet our financial obligations. You can find out more on the FSCS website, www.fscs.org.uk.