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If you are in debt, the number of different solutions available to you can be overwhelming. If you are considering a Debt Management Plan, but wondering what it is, how it works and what other solutions might be right for your circumstances, you have come to the right place.

If you would like a no obligation, confidential chat with a debt advice expert – you can contact our team on 0141 846 5065 or book a callback here.

What is a Debt Management Plan (DMP)?

A Debt Management Plan is an informal agreement between you and your creditor(s) to pay back your debt at a more affordable rate. Only some kinds of debt can be included in a DMP.

How Debt Management Plans Work

Debt Management Plans are informal debt solutions, the terms and process can vary from company to company, lender to lender and person to person. Creditors don’t have to formally agree to the terms of a plan and can change their mind later. There are two ways to start a debt management plan:

  • Arrange it yourself
  • Have someone else manage it for you

Arrange it yourself

As DMPs are informal solutions, you can arrange a plan on your own without oversight from a money adviser. This also means that your creditors don’t have to accept your proposal. Typical steps to arrange your own debt management plans may include:

  • Calculating a budget to decide how much you can afford to pay back to your creditors each month (and how much you owe them).
  • Contact each company individually, asking them to accept a modified payment plan for your debt.
  • Setting up the relevant payments with your bank under the new agreement for each creditor.

Have a third party arrange & manage it for you

As you may have guessed from the above, arranging a debt management plan and managing it ongoing can be a lot of work depending on the number of creditors you owe money to. As an alternative to this, it is possible to arrange a DMP through a third-party organisation. Debt management companies will typically take the legwork out of the process for you but may charge a fee to do so (Visit Money Helper to find DMP providers who don’t charge a fee). Debt management companies can help simplify the arrangement of your DMP in the following ways:

  • Identify an affordable monthly budget
  • Contact each creditor on your behalf and negotiate the adjusted payments
  • Manage the money – you will typically make a single payment to the debt management company each month and they will then distribute this between your creditors.

Cleanslate do not offer debt management plans. But we do offer a formal debt solution called the Debt Arrangement Scheme which is similar. Read more about the differences between Debt Management Plans and the Debt Arrangement Scheme.

Advantages & Disadvantages of Debt Management Plans


  • Can be set up for free (although some debt management companies will charge a fee)
  • No minimum debt level
  • Single monthly repayment when using a third-party firm to manage it


  • Does not cover secured debts
  • Does not usually cover “priority” debts (mortgages, tax arrears etc.)
  • Not legally binding on creditors (see Debt Arrangement Scheme for alternative)
  • Interest and charges may continue to grow

Does a DMP affect my Credit Score?

A DMP may show up on your credit file if your creditors request it and would likely affect your ability to get credit in the future.

What debts do DMPs cover?

A DMP includes non-priority debts. These include credit cards, student loans and bank loans. Priority debts (TV license, court fines, energy bills, council tax) are not usually included.

Is there a minimum level of debt to enter a debt management plan?

As DMPs are informal debt solutions there is no official minimum level of debt to enter a plan. If you choose to work with a debt management company, they may specify a minimum level of debt.

Alternative Solutions

If you are in debt, but a debt management plan doesn’t sound right for you, at Cleanslate we offer three formal debt solutions that may help.

Debt Arrangement Schemes (DAS)

The Debt Arrangement Scheme is a formal version of a Debt Management Plan legislated by the Scottish Government. In a DAS you repay your debt in full and assets like your house and car are protected (as long as you continue to pay your mortgage and secured car finance where appropriate). You can learn more about the differences between a Debt Management Plan and the Debt Arrangement Scheme here.

Protected Trust Deed

Protected Trust Deed is a debt solution whereby you enter into an arrangement to pay a proportion of your debts back over a number of years. It is similar to Sequestration, but with no up-front fee. In a Protected Trust Deed your debts are consolidated into a single, affordable, monthly payment. After it is successfully completed, any remaining debt is written off.


In Scotland, the official name for Bankruptcy is Sequestration. Bankruptcy is the most formal debt solution available in Scotland. When declaring yourself bankrupt, you pay back as much of your debt as you can afford for a period of four years as well as realising the value of your assets. If you co-operate with your Trustee, any remaining debt is written off.

While a perfectly valid choice, Debt Management Plans can be difficult to manage individually. In addition, since interest and charges are not frozen in a DMP, it may take longer to reset your debt than in other debt solutions. Reach out to our team for a confidential chat with debt experts to find the right solution for your circumstances.

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