Debt Management Plans: the free alternative to IVAs

A Debt Management Plan (DMP) is an informal agreement to pay your debts at a rate you can afford. Unlike an IVA or DRO, it's not legally binding — but it's flexible and can be set up for free.

How does a DMP work?

1. A DMP provider reviews your income and expenses

2. They calculate what you can **realistically afford** to pay each month

3. They contact your creditors to propose reduced payments

4. You make **one monthly payment** to the DMP provider

5. They distribute it among your creditors

Free vs paid DMP providers

This is the most important distinction. **Never pay for a DMP** when free providers exist.

Free providers (recommended):

Fee-charging companies (avoid):

Some companies charge **setup fees** and **monthly management fees** — meaning less of your money goes to paying off debt. They often advertise heavily. **Avoid them.**

What debts can a DMP include?

**Included:**

**Not included:**

Priority debts should be dealt with separately, before setting up a DMP.

The pros

The cons

DMP vs other options

| Feature | DMP | IVA | DRO | Bankruptcy |

|---------|-----|-----|-----|-----------|

| Legally binding | No | Yes | Yes | Yes |

| Duration | Until paid | 5-6 years | 12 months | 12 months |

| Debt written off | No (usually) | Yes (remainder) | Yes (all) | Yes (most) |

| Cost | Free | Fees from payments | £90 | £680 |

| Flexibility | High | Low | None | None |

| Suitable for | Any amount | £6,000+ | Under £30,000 | Any amount |

Getting started

1. **Call StepChange** on 0800 138 1111 (free, confidential)

2. They'll review your full financial situation

3. If a DMP is right for you, they'll set it up for free

4. If a different solution is better (IVA, DRO, etc.), they'll explain the options

The key message: **get free advice first**, and never pay for debt management you can get for free.