DMP and Credit Rating

Debt Management Plans (DMP) are often a good solution for those that find themselves struggling at the end of the month to pay all the bills as well as making the regular payments to debts. It is informal rather than the formal solutions of a bankruptcy or an IVA. There are many companies that can assist in setting up a debt management plan and it is important to note that services differ greatly and sometimes there is a fee involved in setting up the plan, always check this with the provider.


Unlike Individual Voluntary Agreements (IVAs) and Bankruptcy, the debtors details are not logged on the public Insolvency Register, nor are any details published in any newspapers. This means that there is no reason for anyone to find out about a DMP, nor is there any need to tell anyone such as an employer, as there may be with bankruptcy.

Credit Rating

While a DMP is an informal arrangement (i.e. it is not legally binding), the creditors involved will still expect 100% of the outstanding debt to be repaid. A DMP is designed to lower the monthly repayment amounts to make it more manageable for the debtor, however this means that the original repayment terms have been broken (as the creditors are being asked to accept a lower repayment amount than was originally agreed) and it is likely that the creditors will issue a default notice. So while the DMP itself may not appear on a credit record, the default notice will. This will remain on a credit file usually for a period of 6 years from the time of the default. As such, it may create difficulties obtaining future credit. That said, for an individual seeking to clear their debts, it is unwise to enter into further credit.

It is always best to seek advice from a reputable money advisor, debt management company or Insolvency Practitioner before entering into any arrangements. Many companies will offer free advice which can be hugely beneficial to understand the best option available.