If You’re Overwhelmed by Debt, You Are Not Alone

If you are struggling to pay off credit cards, store cards, or even payday loans, let me say this: you are not alone. Many people in the UK find themselves juggling different debts, feeling worried every time the post arrives or the phone rings. It can feel like you are stuck, but there is a way out. You can take back control, one step at a time.

A Debt Management Plan, or DMP, could be the answer for you if most of your debts are what’s called non-priority. Let’s walk through exactly what a DMP is, how it works, who it helps, and most importantly, what steps you can take right now to get a grip on your finances.

What Is a Debt Management Plan? Plain English, No Jargon

A Debt Management Plan is a simple agreement. You and your creditors (the companies you owe money to) agree on a new way for you to pay back your non-priority debts. Most of the time, a DMP is managed by a debt advice charity or a credit counselling service. These experts help you work out what you can afford, talk to your creditors, and arrange for you to make just one affordable payment each month. They often ask your creditors to freeze interest or extra charges too.

A DMP is not a legal process. It does not go through the courts. You are not made bankrupt. It is an informal agreement, which means you keep some control and flexibility.

What Counts as Non-Priority Debt? Understanding What a DMP Covers

Non-priority debts are debts where, if you fall behind, your home, heat, water, or other essentials are not directly at risk. That means you don’t face eviction or the bailiffs over these types of debts. Common examples include:

• Credit cards
• Store cards
• Unsecured personal loans (these are loans not tied to your home or car)
• Overdrafts
• Payday loans
• Catalogue debts
• Old utility bills (as long as they’re not for your current supply)

But some debts are priority, and these must always come first. If you miss them, you could lose your home, have your energy cut off, or face court. Priority debts include:

• Mortgage or rent arrears
• Council tax
• Court fines
• Gas, electricity or water bills (for your current supply)
• Child maintenance
• Tax debts

A DMP is only for non-priority debts. You must pay priority debts directly and separately.

TIP: I have seen many people get into trouble by missing priority bills while focusing on other debts. Always make sure your rent, council tax, and utility bills are paid first before you pay anything towards credit cards or loans.

Why Are Priority Debts Not Included?

If you do not pay your mortgage or rent, you could be evicted. If you ignore council tax, you could face court and even prison in some cases. These are essential for your safety and security. That’s why a DMP never covers these debts. Deal with priority debts first. If you are unsure, ask a debt advice charity for help sorting your debts into priority and non-priority.

How Does a Debt Management Plan Work? Step by Step

1. Assessment: A debt advisor looks at your income and all your outgoings—rent, food, energy, everything you need to live. They help you see what you can realistically pay towards your debts.
2. Budget Creation: Together, you create a budget that covers all your essentials. What’s left is what you can use to pay off your non-priority debts.
3. Negotiation: The advisor contacts each creditor for you. They explain your situation, share your budget, and ask them to accept lower payments and, where possible, freeze interest or extra charges.
4. Single Payment: Each month, you pay one set amount to the DMP provider. They split this between your creditors.
5. Regular Review: Life changes, so should your plan. If your situation improves or worsens, the DMP can be adjusted.

How Do They Work Out What You Pay?

You only pay what you can afford after all essentials are covered. This means food, rent, council tax, utilities, travel, and some breathing space for emergencies. The payment is based on your real budget, not what creditors ask for.

TIP: I have helped many borrowers avoid stress by setting aside a small emergency fund in their budget. Even £10 a month can help you deal with unexpected expenses without missing a DMP payment.

Who Can Use a Debt Management Plan?

DMPs are for people who:

• Have mostly non-priority debts (credit cards, loans, overdrafts, etc.)
• Are struggling to keep up with monthly payments
• Have some income left after essentials to pay off debts
• Are willing to stop using credit and work towards being debt free

You don’t have to owe a huge amount. While many providers have a minimum, often around £5,000, some will help with less. What matters is that you can make regular payments, however small, after covering all your basic needs.

Can I Get a DMP if I Have a Low Income or Smaller Debts?

Yes, you can. As long as you can pay something regularly, some charities will help. The most important thing is to be honest about your budget. If you do not have enough left over to pay anything, you may need a different solution (like a Debt Relief Order). Always ask for free advice.

What Debts Can I Include? What’s Left Out?

Included in a DMP:

• Credit cards
• Store cards
• Personal loans (unsecured)
• Payday loans
• Overdrafts
• Catalogue debts
• Some old utility bills

Not included in a DMP:

• Mortgage or rent arrears
• Council tax arrears
• Court fines
• Child maintenance
• Tax debts (like HMRC)
• Secured loans (tied to your home or car)
• Student loans

If in doubt, always ask your debt advisor. Remember: pay your priority debts before you pay anything towards a DMP.

Who Runs Debt Management Plans?

You can get a DMP from:

• Debt charities (StepChange, Christians Against Poverty, National Debtline, PayPlan). These are free. They are funded by donations and grants.
• Commercial companies (private firms). They may charge setup fees or a monthly fee.

Always check if the provider is regulated by the Financial Conduct Authority (FCA). This is your safety net.

What Will a DMP Cost Me?

• Charity providers: No fees. They are free to you.
• Commercial providers: They may charge a set-up fee, a monthly management fee, or both. These fees are taken from your payment, so less goes to your creditors.

My advice? If you can, use a charity provider. You keep more money to pay off your debts. Ask about fees up front.

Why Do Some Providers Charge Fees?

Commercial companies need to cover their own business costs. That is why they charge fees. But every pound you pay in fees is a pound not going to your debts. If you qualify for a free DMP, it is almost always the better choice.

How Do Negotiations with Creditors Work?

Your DMP provider deals with your creditors for you. They:

• Share your financial statement and budget.
• Ask for interest and charges to be frozen.
• Explain that a fair plan will help everyone.

Most creditors say yes because regular payments, even if smaller, are better for them than nothing. Remember, they don’t have to agree, but with a reputable DMP provider, most will.

What Happens If I Miss a Payment?

If you miss a payment, call your provider straight away. Do not ignore it. Your provider can help you adjust your plan or contact your creditors again. Missing payments may mean your creditors start charging interest again, or could even take further action. Stay in touch. You are not alone.

TIP: I always tell people to set up a standing order for their DMP payment so it goes out automatically each month. This can help you avoid missing a payment by accident.

How Does a DMP Affect Your Credit?

Short term: Your credit score will go down, often by 50 to 100 points. You will usually have to close or stop using your credit accounts in the DMP.

Long term: A note about your DMP stays on your credit file for six years. Once you finish the plan, it can show as “satisfied,” which may help over time.

Why does this happen? Because lenders see you are not repaying debts as originally agreed. But remember: missed payments or defaulting without a plan can hurt your score much more.

Pros and Cons of a Debt Management Plan

Pros

• One affordable payment a month
• Less hassle from creditors
• Chance to freeze interest and charges
• No court, no public record
• Flexible, you can change it if life changes

Cons

• Only covers some debts, not all
• Fees if you use a commercial provider
• Credit score drops while on the plan
• Debts are not written off, you pay them in full
• Creditors can refuse, but most agree

Why Choose a DMP Over Bankruptcy?

Bankruptcy is a formal, legal process. It can write off debts but affects your home, job, and credit for years. A DMP is informal. No court. No official record. No risk to your home or job. You keep more control over your finances and your future.

Are There Alternatives to a Debt Management Plan?

Yes. Here are some:

• Debt consolidation loan: One new loan pays off old debts. Only works if you get a good rate and do not risk your home.
• Debt settlement: You offer less than you owe. May hurt your credit badly and could lead to legal action.
• IVAs or bankruptcy: Formal solutions to write off debt. Involve court, fees, and public record.

If you can pay something each month, a DMP is less risky. But if you cannot pay your debts, or you need a fresh start, other options may suit you better. Always compare.

What Happens When You Finish or Want to Leave a DMP?

• Finish: All your included debts are cleared. Your provider can help update your credit file.
• Leave early: You can leave at any time, but creditors may start charging interest or extra fees again.
• Need to stop? Speak to your provider. You may qualify for a different solution, like a Debt Relief Order or IVA.

Common Questions And Straight Answers

• Can I keep using my credit cards?
  No. Accounts in your DMP are usually closed. This stops you getting deeper into debt.
• Can I arrange a DMP on my own?
  You can try, but most people find it easier and safer with a charity or regulated provider.
• Can I add new debts later?
  Yes. If you take on new non-priority debts, most providers will help you add them.
• Do I have to tell my creditors everything?
  Yes. Honest, full information means your plan is realistic and fair. It also encourages creditors to cooperate.
• Can I pause payments if something happens?
  Some providers allow short payment breaks for emergencies. But always let them know as soon as possible.

Is a Debt Management Plan Right for You? Steps to Take Next

A DMP can help if:

• You have several non-priority debts
• You have enough income to cover the basics and a bit extra for debts
• You want to avoid court or insolvency

Here’s what you can do now:

1. List all your debts.
2. Make a realistic budget include everything you need to live.
3. Contact a free, FCA-regulated debt charity for advice.
4. Compare all your options before signing up.

Useful Tools:

• Budget calculators: MoneyHelper, StepChange, Money Dashboard
• Find a regulated adviser: MoneyHelper debt advice locator
• Free credit reports: Experian, Equifax, TransUnion

Where This Leaves You and Your Debt Journey

You do not have to keep living with worry about your debts. A Debt Management Plan gives you a clear path to pay off what you owe in a way that works for your life, not just your creditors’. By acting now, getting advice, making a real budget, and choosing the right provider, you can take control. No shame, no blame, just steady steps towards a debt-free future.

Remember: help is free, and every positive step you take puts you closer to freedom from debt. Call a free debt advice charity today, and start taking back your financial power.

If you need help right now, reach out to StepChange, National Debtline, or Christians Against Poverty. You deserve support, and you are stronger than your debt.